What Is My Business Worth?
A UK Owner’s Guide for 2025–26

In this guide

How businesses are valued in the UK

The answer to “what is my business worth?” depends almost entirely on context. The valuation method applied — and the number it produces — varies considerably depending on why the valuation is needed, who the likely buyer is, and what the financial profile of the business looks like.

For the vast majority of UK SMEs with at least two years of trading history and EBITDA above £500,000, the most relevant method is the EBITDA multiples approach. This is how trade buyers, private equity funds, and corporate finance advisers instinctively think about a business the moment they see it. Every other method — discounted cash flow, asset-based approaches, revenue multiples — plays a secondary role for operating businesses in most sectors.

The EBITDA multiples method works as follows. You start with the normalised EBITDA of the business (more on normalisation below). You then apply a multiple that reflects the quality, growth profile, sector, and risk of that earnings stream. The result is the enterprise value — the gross value of the business before adjusting for the balance sheet. Deduct net debt and add any surplus cash or working capital, and you arrive at the equity value: what you actually receive.

For earlier-stage businesses, those with volatile earnings, or companies in capital-intensive sectors, other methods come into play. A professional valuation will consider all relevant approaches and triangulate a conclusion.

Other valuation methods you may encounter

• Revenue multiples — used in SaaS, technology, and fast-growth businesses where profitability lags behind revenue, and where the size of the recurring revenue base is the primary value driver.
• Discounted cash flow (DCF) — converts a multi-year forecast of free cash flows into a present value. Theoretically rigorous but highly sensitive to the assumptions used. Typically deployed as a sense-check alongside the multiples method.
• Net asset value — relevant for property companies, holding companies, or businesses being wound down. Rarely appropriate for operating businesses where the value lies in future earnings, not the balance sheet.
• Comparable transaction analysis — benchmarks your business against recent deals in the same sector. Useful context, but disclosed deal data in the UK SME market is limited, so this works best alongside other approaches.

Understanding EBITDA and normalisation

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. It strips out the effects of financing decisions, accounting policies, and capital expenditure patterns to give a cleaner view of the cash-generating power of the underlying business. It is the number buyers use to compare opportunities across sectors and sizes.

However, the EBITDA in your filed accounts is almost never the number used in a valuation. The reason is that SME accounts reflect owner-specific decisions: a salary above or below market rate, personal expenses run through the business, one-off costs such as legal fees or restructuring charges, and income or costs from non-trading activities. These are legitimate in the accounts context, but they distort the picture for a prospective buyer.

Normalisation is the process of adjusting reported EBITDA to represent the underlying commercial earnings of the business as it would perform under new ownership. Common normalisation adjustments include:

• Replacing the owner’s salary with a market-rate management cost for the role they perform.
• Removing personal vehicle costs, insurance, or other expenses with a personal element.
• Adding back one-off professional fees (legal disputes, advisory fees incurred in connection with the transaction, redundancy costs).
• Removing non-recurring revenue or costs that will not continue under new ownership.
• Adjusting rent to market rate if the property is owned by the founder.

Getting normalisation right is where a significant portion of valuation value is either created or destroyed. Buyers will seek to minimise adjustments. Sellers and their advisers will argue for the full picture. A professional, ICAEW-standard valuation documents every adjustment explicitly, with supporting rationale, so that the number can be defended under challenge.

What multiple will I get? Size matters

The single most consistent pattern in UK SME valuations is that the multiple expands as the business gets larger. A company producing £500,000 of normalised EBITDA will almost always trade at a lower multiple than one producing £2 million — even in the same sector, with the same growth rate and the same management team.

The reason is risk. Smaller businesses are more dependent on a single owner, have fewer layers of management, are less resilient to the loss of a key customer, and represent a less liquid investment for a buyer. All of these factors compress the multiple a buyer is prepared to pay.

Ranges reflect UK SME market conditions 2025–26. Actual multiples vary materially by sector, growth profile, customer concentration, and management depth. This table is indicative only.

The five factors that determine your multiple

Within any EBITDA band, there is still a wide range of possible multiples. The difference between a 4x and a 7x outcome on the same level of earnings can amount to millions of pounds. That difference is driven by five key factors.

1. Revenue quality and recurring income

Buyers pay a premium for predictability. A business with 70% of revenue under long-term contracts or subscription arrangements commands a materially higher multiple than an equivalent business with the same EBITDA but entirely project-based or one-off revenue. The logic is straightforward: contracted income reduces the risk that earnings deteriorate under new ownership.

2. Customer concentration

If your largest customer accounts for more than 20–25% of revenue, most buyers will apply a discount to the multiple. If a single customer represents 40% or more of turnover, you should expect meaningful price adjustments or earnout structures to protect against customer attrition post-sale. Reducing customer concentration in the two to three years before exit is one of the highest-value actions an owner can take.

3. Management depth and owner dependency

A business that runs well without the founder in day-to-day operations is worth more than one that depends on them. Buyers are acquiring an earnings stream — if that stream is contingent on the seller remaining in place indefinitely, the acquisition risk is significantly higher. Invest in your management team, document your processes, and make yourself structurally replaceable before you open conversations with buyers.

4. Earnings growth trajectory

Buyers pay for the future, not the past. A business showing three years of consistent 15–20% earnings growth commands a structurally different conversation from one showing flat or declining EBITDA, even if the absolute numbers are identical. Where possible, approach buyers at a point of earnings strength.

5. Sector tailwinds and strategic fit

Strategic buyers — trade acquirers who want the business for synergy reasons — will often pay more than financial buyers, because the value in their hands is higher than the standalone earnings justify. If your business sits in a sector with clear consolidation activity, or offers capabilities a larger buyer cannot easily replicate organically, you are likely to attract premium interest. A good adviser will help you identify who those buyers are before running any process.

Free business worth diagnostic

Answer five questions to get an indicative valuation range for your business. This tool uses the same framework applied in a professional valuation — it is not a formal report, but it will give you a defensible starting figure and identify where you sit relative to your sector peers.

Five mistakes that destroy business valuation

In practice, the gap between what a business could be worth and what it actually sells for is rarely driven by market conditions. It is almost always driven by avoidable preparation failures.

1. Going to market without a normalised EBITDA calculation

Arriving at a buyer meeting without a clear, documented view of your normalised earnings hands the initiative entirely to the buyer. They will produce their own normalisation — and it will be conservative. Having your own, professionally prepared analysis in advance is a non-negotiable element of serious exit preparation.

2. Confusing turnover with value

Revenue without profitability creates very little value in a sale. A £10 million turnover business generating £300,000 of EBITDA is worth considerably less than a £3 million turnover business generating £1.2 million of EBITDA. Buyers buy earnings, not revenue lines.

3. Poor financial record-keeping

Buyers conduct financial due diligence. If your management accounts are inconsistent with your statutory accounts, your accounting treatment has changed year to year, or you cannot explain variances between periods, the due diligence process becomes adversarial. Clean, well-documented financials reduce due diligence risk and preserve the agreed price.

4. Selling under pressure

Owners who sell because they have to — due to health, dispute, or financial distress — almost always receive less than those who sell from a position of strength. The best time to explore your options is when you do not need to sell. Building a valuation picture two to three years before any exit gives you time to close gaps and approach the market strategically.

5. Accepting a heads of terms without professional advice

The headline price on a heads of terms is rarely what lands in your bank account. Locked box mechanisms, completion accounts, normalised working capital, and earnout structures can all significantly affect the actual proceeds. An independent adviser who understands these structures — not just your solicitor — is essential at the point of negotiation.

When to get a professional valuation

A formal valuation from an ICAEW-qualified adviser is not only for the point of sale. There are several situations where an independent, professionally prepared report is important.

• Pre-sale planning — understanding your current number and what drives it, with time to improve it before approaching buyers.
• EMI share option schemes — HMRC requires a formal valuation (known as a 431 valuation) before options are granted under the Enterprise Management Incentive scheme.
• SSAS pension lending — if your pension scheme is lending money to your business, the market value of any security must be independently established.
• Shareholder disputes — when shareholders cannot agree on value, an independent report provides a neutral basis for negotiation or, if necessary, legal proceedings.
• Management buyouts — both the vendor and the MBO team need a clear, defensible view of value to structure a deal that works for all parties.
• Fundraising — if you are raising equity investment, a professional valuation establishes the basis for your pre-money valuation and helps you defend it to investors.

In all of these situations, the cost of a professional valuation is small relative to the decisions it informs. An informal or rule-of-thumb number is rarely sufficient for any of them.