Business Valuation Calculator
Calculate UK business valuation using standard methods.
What this calculator does
This business valuation calculator produces a value range using the two market approaches buyers most often apply. Enter turnover, EBITDA, and the multiples relevant to your sector, and it returns a valuation from each method along with their average — giving you a range rather than a single figure that would imply more precision than exists.
The output estimates what a buyer might pay rather than what the business is worth to you. Market value is set by comparable transactions and by the risk a buyer sees in your particular earnings. The calculator does the arithmetic; the multiple you enter carries nearly all of the judgment.
When to use it
The most valuable use is years ahead of any sale rather than during one. Running it annually shows which lever moves value fastest — usually margin improvement rather than turnover growth, because the multiple amplifies every pound of earnings but only a fraction of every pound of sales.
It is also the right starting point when an approach arrives unsolicited, which is how a great many UK businesses change hands. Having a defensible independent figure before you reply changes the shape of the conversation. And it is essential for a shareholder buyout, where two parties need a shared basis for a price rather than competing instincts.
Understanding the inputs
Turnover should be the trailing twelve months, normalised if the period contained anything unrepresentative. EBITDA is earnings before interest, tax, depreciation, and amortisation — though the figure buyers use is adjusted EBITDA, after add-backs for above-market director remuneration, personal costs put through the business, and genuinely non-recurring items.
The multiples carry the real weight. UK EBITDA multiples for owner-managed businesses commonly run three to six, rising with scale, recurring revenue, and management depth. Turnover multiples sit well below one for services and distribution and considerably higher for software. Use comparable transaction evidence for your sector, because the multiple influences the answer far more than the earnings figure does.
How is this calculated?
Revenue Method: Value = Revenue × Multiple. EBITDA Method: Value = EBITDA × Multiple. Average the two approaches for a range.
A worked example
A specialist services company reports £1.8 million of turnover and £280,000 of EBITDA. At a 4 times EBITDA multiple it values at £1.12 million; at a 0.7 times turnover multiple, £1.26 million. The average of roughly £1.19 million is a sensible opening range.
Now normalise the earnings. The director draws £120,000 against a market rate of £70,000 for the role, giving a £50,000 add-back and adjusted EBITDA of £330,000. At the same 4 times multiple that is £1.32 million — £200,000 more from an accounting adjustment alone, which is why add-backs are the most argued-over part of any deal.
Limitations and assumptions
The calculator applies whatever multiples you supply and inherits any optimism in them. It captures nothing about customer concentration, owner dependency, contract quality, or the state of your records, all of which buyers price heavily and any of which can move the multiple by a full turn.
It produces enterprise value rather than proceeds, ignoring debt including director's loans, working capital adjustments, transaction fees, and capital gains tax. For any purpose with legal or tax consequences — a shareholders' agreement, probate, or an EMI scheme valuation agreed with HMRC — engage a qualified valuer. Use this to orient yourself and prepare, not as a figure to present as fact.
Common Questions
- How are UK small businesses valued?
- Most owner-managed businesses trade on a multiple of adjusted EBITDA, commonly three to six times, rising with size and management depth. Very small businesses are often valued on seller's discretionary earnings instead. Turnover multiples apply mainly to software and high-growth companies where profit is deliberately reinvested rather than reported.
- What are add-backs and why are they contested?
- Add-backs are personal or one-off costs removed from profit to show underlying earnings — an above-market director's salary, a car through the business, a one-time legal cost. At a four times multiple, each pound of accepted add-back adds four pounds of value, which is exactly why buyers examine them so closely.
- Do my filed accounts determine the valuation?
- Not directly, but they constrain it. Small companies filing abridged accounts at Companies House often show little profit because remuneration is taken as salary and dividends. A buyer will rebuild the numbers from management accounts and tax returns, so having clean, reconcilable records for three years is worth real money.
- Why do the two methods give different answers?
- Because they measure different qualities. A turnover multiple rewards scale and growth; an EBITDA multiple rewards profitability. A fast-growing business at thin margins values higher on turnover, a mature profitable one higher on earnings. The gap between them tells you something about the company rather than signalling an error.
- What raises the multiple within a sector?
- Recurring or contracted revenue, no single customer above roughly 20 percent of turnover, documented processes, and a management team that functions without the owner. Businesses where the founder is effectively the product trade at a discount whatever the profit, because those earnings do not transfer with the shares.
- Is this enterprise value or what I actually receive?
- A multiple applied to EBITDA gives enterprise value — the business before debt. To reach equity value, deduct interest-bearing debt including director's loans and add surplus cash. Most UK deals complete on a cash-free, debt-free basis with a working capital adjustment, so the two figures can differ substantially at completion.
- What tax will I pay on a sale?
- A share sale by an individual is normally subject to capital gains tax. Business Asset Disposal Relief may reduce the rate on qualifying gains up to a lifetime limit, subject to conditions on shareholding, office held, and period of ownership. The rules change regularly, so take advice well before a transaction rather than during one.
- Should I expect an earnout?
- If the business depends on you personally or has concentrated customers, almost certainly. An earnout defers part of the consideration against post-completion performance. Negotiate the measurement basis and your degree of control during the earnout period carefully — those terms determine whether you ever see the money more than the headline figure does.
- When do I need a formal valuation?
- Whenever the number carries legal or tax weight: a shareholders' agreement, a share buyback, matrimonial proceedings, probate, or an EMI option scheme where HMRC valuation agreement is needed. Those require a qualified valuer and a defensible method. Use this calculator to orient yourself, not as evidence anyone will rely on.