Business Valuation Calculator
An indicative value range for a UK small business from its adjusted profit and a sector multiple, adjusted for growth and how dependent it is on you.
- Free, no sign-up
- Runs in your browser, nothing is stored
- Formula and worked example included
Business Valuation Calculator
Enter your figures to see results.
How much is my business worth?
Most UK small businesses sell for a multiple of their adjusted annual profit: typically two to four times for trades, retail and hospitality, three to five for professional services and manufacturing, and higher for software with recurring revenue. A services firm making £120,000 of adjusted profit with £40,000 of spare cash and £15,000 of debt is worth somewhere around £325,000 to £535,000 to a buyer. Where it lands in that range depends on growth, how much of the business walks out of the door with you, and the buyer.
How to use this calculator
- Work out adjusted profit: profit before tax and interest, adding back your own pay above a market-rate salary and any one-off or personal costs run through the company.
- Choose the sector that best matches the business and say whether it is growing, steady or declining.
- Add surplus cash and any debt the buyer would take on, and tick the box if the business would struggle without you.
What your result means
How to read the figure, what counts as normal, and what to do about it.
How buyers value a small business
A buyer is paying for future profit, and the simplest way to price it is a multiple of current profit. The multiple reflects risk and growth: a business whose profit is likely to continue without the owner, with contracts, systems and a team in place, earns a higher multiple than one that is really a job with a brand name. Sector matters because it stands in for those things: accountancy practices have recurring fees and loyal clients; cafés have neither.
Two adjustments turn the headline into what you would actually receive. Surplus cash is added because the buyer gets it; debt is subtracted because the buyer inherits it. Working capital needed to run the business is usually left in and not counted either way.
Typical UK multiples of adjusted profit
| Sector | Multiple range |
|---|---|
| Café, restaurant, pub | 1.5x to 2.5x |
| Retail shop / e-commerce reseller | 1.5x to 3x |
| Trades and construction | 2x to 3.5x |
| Professional services / agency | 2.5x to 4.5x |
| Own-brand consumer products | 2.5x to 4.5x |
| Accountancy / financial advice | 3x to 5x (often priced on recurring fees) |
| Manufacturing / engineering | 3x to 5x |
| Care, childcare, health | 3x to 5.5x |
| Software / SaaS (profitable) | 5x to 9x, or 3x to 6x revenue for fast growers |
These are ranges for owner-managed businesses with profits between roughly £50,000 and £1 million. Larger businesses attract higher multiples; very small ones lower.
What moves the multiple up or down
- Recurring revenue (contracts, subscriptions, retainers) versus one-off sales.
- Customer concentration. One customer over 20% of revenue is a discount; over 40% may be a deal-breaker.
- Owner dependence. If clients buy from you personally, expect an earn-out or a lower price.
- Clean books. Three years of accountant-prepared accounts, up-to-date management information, no personal expenses tangled in.
- Growth and trend. Rising profit earns a premium; a decline needs an explanation.
- Assets and lease. Owned premises, equipment in good order and a long lease at market rent all help.
Most of these can be improved in the two or three years before a sale, and the improvement is worth several times the effort: raising the multiple from 3x to 4x on £120,000 of profit adds £120,000 to the price.
Worked example: a marketing agency thinking about selling
The agency makes £95,000 operating profit. The owner pays herself £70,000 where a hired MD would cost £45,000, and £5,000 of last year's costs were a one-off office move. Adjusted profit is therefore about £120,000. Revenue has grown 12% a year, but two of the largest clients deal only with her.
Services range 2.5x to 4.5x, plus 0.5x for growth, less 0.5x to 0.75x for owner dependence: about 2.5x to 4.3x. Enterprise value at the mid-point: 120,000 × 3.4 = £405,000.
Add £40,000 of surplus cash and subtract a £15,000 loan: an equity value around £430,000, in a range of roughly £325,000 to £535,000. Handing the two key clients to a senior colleague a year before sale could move the figure to the top of that range.
Frequently asked questions
Is my business worth its turnover?
Almost never. Turnover is what passes through; profit is what a buyer can keep. Revenue multiples are used for fast-growing software businesses, where profit is being deliberately reinvested, and occasionally for practices with recurring fees. Everything else is valued on profit.
What is SDE or adjusted EBITDA?
Seller's discretionary earnings is profit before tax, interest, depreciation and the owner's total pay and perks: the cash an owner-operator actually takes out. Adjusted EBITDA is similar but deducts a market-rate salary for a manager. Smaller businesses tend to be valued on SDE, larger ones on EBITDA, which is why the multiples differ.
How do I sell a small business in the UK?
Get the accounts and management information in order, take tax advice on structure (share sale versus asset sale, and Business Asset Disposal Relief), decide whether to use a broker, and prepare an information memorandum. Sales typically take six to twelve months.
Will I have to stay on after the sale?
Often, for three to twelve months, and if the business depends on you the buyer may make part of the price conditional on results after completion. Reducing that dependence before you sell is the single best way to improve both the price and the terms.
The maths behind this calculator
For anyone who wants to check the working or rebuild it in a spreadsheet.
The calculation
Adjusted profit = Operating profit + Owner pay above market rate + One-off costs − One-off gains Multiple range = Sector range ±0.5 for growth or decline −0.5 to −0.75 for owner dependence Enterprise value = Adjusted profit × Multiple Equity value = Enterprise value + Surplus cash − Debt
The tool shows the low, central and high points of the adjusted range. The central figure is a starting point for a conversation with a broker or accountant, not a price.
Assumptions and limits
- Multiples are indicative ranges drawn from UK broker and deal data for owner-managed businesses and are not a substitute for a professional valuation.
- Adjusted profit is taken as sustainable. A one-off good year should be normalised down.
- Deal structure is ignored. In practice a significant share of the price is often deferred or contingent on future performance, which reduces the value in cash terms.
- Capital Gains Tax on the sale is not included; see the Capital Gains Tax calculator and Business Asset Disposal Relief.
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