Sector multiples
UK SME valuation multiples: our view, sector by sector
James Nelson
Founder & M&A Valuation Director, The Business Valuers
17 years in UK business brokerage and valuation. 1,000+ SME valuations completed. Former Head of Corporate Sales at Christie & Co.
This is what we see UK owner-managed businesses actually sell for, sector by sector, for the size of business we value — turnover of roughly £500k to £50 million. We have set out the range we would expect, where the top of it is earned, and where the bottom of it applies.
These ranges reflect our own view of the UK SME market, formed from 17 years of brokering and valuing owner-managed businesses and over 1,000 completed valuations, cross-checked against comparable transaction evidence. They are indicative benchmarks for orientation, not a valuation of any specific business — and the range a particular business achieves depends far more on the factors set out below than on the sector average.
Our view as at
Indicative multiple ranges by sector
Every range below is applied to normalised earnings, not to reported profit. Where a sector is valued on a different basis — earnings before rent in care, gross recurring fees in accountancy — we say so on the sector page it links to.
| Sector | Typical range | Where the top is earned | Where the bottom applies |
|---|---|---|---|
| Care homes & supported living | 5× – 9× normalised EBITDA | High occupancy, a strong fee mix weighted to private payers, a good CQC rating and modern, fully registered stock with no capex backlog. | Older converted stock, occupancy below the low 80s, heavy agency staffing or an inspection rating that limits the buyer pool. |
| Dental practices | 4× – 9× | Mixed or private-led income, a stable associate team carrying most of the clinical work, and secure premises on a long lease or freehold. | Heavy NHS dependence with clawback history, or a principal producing most of the chair time with no associate cover behind them. |
| Veterinary practices | 5× – 12× | Multi-site groups with genuine management depth, strong health-plan income and vet retention that does not depend on the seller. | Single sites reliant on the owner vet, or equine and mixed practice where earnings are more seasonal and harder to staff. |
| Opticians & pharmacies | 4× – 8× | Community pharmacy with steady item volume and controlled locum cost, or an optical practice with strong private dispensing margin and secure premises. | Independent optical practices on short leases, or dispensing businesses where locum cover absorbs much of the earnings. |
| Nurseries & childcare | 4× – 9× | Small groups with a manager at each setting, high occupancy and a fee mix that is not dominated by funded hours. | Single settings with occupancy gaps, thin payroll headroom, or premises on a short lease. |
| Pubs & restaurants | 1× – 2× (leasehold); owned pubs dependent on freehold value | Freehold trade with a profitable operation, where the property underpins value and the trading business sits on top of it. | Leasehold sites, owner-operated kitchens and businesses where the operator's own labour is the margin. |
| Hotels & holiday parks | 2× – 10× | Holiday and caravan parks where pitch tenure is secure and site fee income is contracted and recurring. | Small owner-run guest houses and B&Bs, where the business is effectively a job with a building attached. |
| Funeral directors | 3× – 6.5× | Multi-branch businesses with managers in place, a steady or rising call volume and prepaid plan liabilities properly funded. | Single-branch businesses run by the named family owner, where the name on the door is the reason for the calls. |
| Estate & letting agencies | 2.5× – 6× | Lettings-led agencies with a large, well-retained managed book and low landlord churn. | Sales-led agencies dependent on transaction volumes and on the principal's own listings. |
| E-commerce & D2C | 2× – 6× | Managed brands with a team, diversified acquisition channels and a genuine contribution margin after all advertising cost. | Owner-operated stores on a single platform or a single ad channel, where the owner does the buying and the marketing. |
| Software & SaaS | 6× – 12× | Established products with low churn, growing recurring revenue, high gross margin and no single customer carrying the book. | Owner-run software with modest growth, bespoke development income, or a product still dependent on its founder to sell. |
| IT managed services | 3× – 8× | Contracted monthly recurring revenue across a spread client base, with low seat churn and engineers who own the relationships. | Owner-operated support businesses trading largely on time and materials, with rolling 30-day arrangements. |
| B2B & professional services | 3.5× – 5.5×, 6×+ for recurring-revenue leaders | Managed businesses with recurring or retained contracts, delivery staff who hold the client relationships and a spread client base. | Founder-dependent practices below 3×, where clients buy one person's time and income resets to zero each year. |
| Accountancy practices | 3× – 5× | Advisory-weighted practices with a team, strong fee retention and clients who deal with staff rather than only with the principal. | Compliance-led practices with an ageing client base or fees concentrated on the retiring partner. |
| Recruitment agencies | 2× – 6× | Managed agencies with a mixed perm and temp desk, consultants billing independently of the owner and a running contract book. | Owner-billing perm agencies where most of the net fee income is generated by the person selling. |
| Start-ups & early stage | Method-led, not multiple-led | Not applicable — early-stage businesses are valued on funding-round evidence, discounted cash flow or an asset basis rather than on a sector multiple. | Not applicable — where there is no maintainable earnings figure, applying an earnings multiple produces a meaningless number. |
| Manufacturing & engineering | 3.5× – 8× | Precision or accredited niche manufacture with a visible order book, protected margin and no dominant customer. | General sub-contract engineering competing on price, or asset-heavy low-margin fabrication where a net asset floor applies instead. |
| Construction & contracting | 2.5× – 6× | Established contractors holding framework positions or repeat client relationships, with clean work in progress and controlled retentions. | Sub-contract trade businesses dependent on the owner pricing and winning the work. |
| Haulage & logistics | 2.5× – 6× | Contracted logistics and 3PL work with defined rates and terms, an owned depot or secure tenure, and stable driver retention. | General haulage working the spot market, with an ageing fleet and heavy finance against the vehicles. |
| Cleaning & facilities | 2× – 7× | Specialist or accredited work — healthcare, pharmaceutical, food production — at 5× – 7×, and managed contract bases with supervisors, long terms and evidenced retention at 3× – 5×. | Owner-run companies where the owner quotes, supervises and covers shifts, on contracts terminable at short notice. |
| Garages & MOT stations | 1.5× – 4.5× | Managed sites with technicians in place, good labour recovery and MOT bay capacity that is actually being used. | Owner-worked garages where the owner is one of the technicians and the earnings are effectively wages. |
How multiples move with size
Size is the second strongest influence on a multiple after sector, and for many businesses it is the strongest of all. The same trading activity is rated differently at £600k of turnover and at £6m, because the risk a buyer takes on is different.
| Turnover | Typical multiple | What drives it |
|---|---|---|
| Under £500k | 1× – 2.5× | Usually valued on seller's discretionary earnings rather than EBITDA, because the owner is the business. Many businesses at this level sell on assets plus a modest goodwill figure. |
| £500k – £1m | 2× – 3.5× | Buyers are individuals and very small trade acquirers. Price is sensitive to how much of the profit disappears once the owner is replaced at a market salary. |
| £1m – £3m | 3× – 4.5× | The first point at which a management layer usually exists. Trade buyers enter the picture and deal structures begin to include deferred elements rather than all cash. |
| £3m – £5m | 4× – 5.5× | Systems, reporting and a second tier of management are normally in place, and diligence is correspondingly deeper. Sector characteristics start to matter more than owner-dependence. |
| £5m – £10m | 4.5× – 6.5× | Consolidators and private equity are credible buyers, and competitive tension itself adds to the price. Quality of earnings work by the buyer becomes standard. |
| £10m+ | 5× – 8×+ | Institutional buyers, funded deals and a professional sale process. Sector multiples at this level converge on the published mid-market ranges rather than SME ones. |
Larger businesses command more for reasons that have nothing to do with being better run. They carry management depth, so the departure of one person is survivable. They are funded by buyers with cheaper money and a longer horizon. They attract more than one credible bidder, and competition alone lifts a price. And they can absorb the cost of a professional sale process, which surfaces buyers an owner would never have found alone. A business that doubles in size does not simply double in value; it moves up the range as well.
What moves a multiple
Owner-dependence is the first thing we look at and the most expensive thing to get wrong. A buyer is not purchasing last year's profit; they are purchasing the profit that survives the owner leaving. Where the owner wins the work, prices the work, holds the key relationships or is the person the customers ask for by name, that profit is at risk from the day the deal completes, and the multiple falls accordingly. The test we apply is simple: if the owner were unavailable for three months, what would happen to revenue? Owners who can answer "very little" — because there is a manager, a sales function and documented processes — are the ones we see reaching the top of their range. The remedy takes a year or two rather than a month, which is why we say it is worth starting before the sale is planned.
Recurring versus project revenue is the distinction that most reliably separates the top of a range from the bottom within the same sector. Contracted, repeating income carries forward into the new owner's first year with very little effort; project income resets to zero every January and has to be won again. In our experience a business with sixty per cent of its revenue under contract will be rated one to two turns above an otherwise identical business selling the same services job by job. The quality of the recurrence matters too. A twelve-month contract with a notice period and a price-review clause is worth considerably more than a rolling arrangement that a client can end with thirty days' notice, even where both have run for years without interruption. Buyers price what is enforceable, not what is habitual.
Customer concentration works asymmetrically: a spread client base rarely earns a premium, but concentration reliably costs. Our rough threshold is fifteen per cent — once a single customer is above that share of revenue, a buyer starts modelling what happens if the relationship ends, and above about thirty per cent many buyers will restructure the deal rather than adjust the price, pushing a large part of the consideration into an earn-out tied to that customer staying. Concentration is also worse than it first appears when the relationship sits with the departing owner, or when several apparently separate customers turn out to belong to the same group or the same end market. We would expect the analysis to look at gross margin concentration, not just revenue, because the largest customer is often the one negotiated hardest on price.
Margin quality decides how much of a growth story a buyer is willing to believe. A business holding a healthy gross margin through a period of cost inflation has demonstrated pricing power, and pricing power is the most transferable asset there is. A business whose margin has been protected by the owner's unpaid hours, by deferred maintenance or by not replacing staff has not demonstrated anything except that the figures have been managed. We look at the trend in gross margin before overheads, at whether price rises have actually been passed through, and at whether the business competes on anything other than being cheaper than the alternative.
Contract length sets the floor under the earnings. In contract-based sectors — cleaning, facilities, managed IT, logistics — the question is not how long the client has been with the business but how long they are committed for, and on what terms. A book of three-year contracts with indexation clauses supports the top of any range in those sectors. A book of thirty-day arrangements does not, no matter how loyal the clients have proved. We would also expect a buyer to check change-of-control clauses: a contract that a client can terminate on the sale of the business is, for pricing purposes, not a contract at all.
Freehold versus leasehold changes not just the number but the structure of the deal. A freehold is valued in its own right and sits alongside the trading business rather than inside the multiple, which is why a freehold pub and a leasehold pub with identical profit can be separated by a factor of several. Leaseholds are priced on what remains: a long lease at a market rent is neutral, a short lease or an imminent rent review is a live discount, and a personal guarantee attaching to the lease is a negotiation the seller will have to conduct whether they expected to or not. Where a freehold is retained and let back to the buyer, the rent agreed changes the earnings the multiple is applied to, so the two numbers have to be settled together.
Quality of earnings is the phrase buyers use for how much they trust the figures, and it quietly governs everything above. Management accounts that reconcile to the statutory accounts, revenue recognised in the period it was earned, stock and work in progress counted properly, and add-backs that can be traced to an invoice — these are not administrative niceties, they are the difference between a price that holds and a price that is renegotiated at the end of diligence. In our experience the businesses that lose value late in a process are rarely the ones with poor trading; they are the ones whose numbers could not be stood up when tested.
Why sector averages mislead
A multiple applied to the wrong earnings figure is worse than no multiple at all, because it produces a precise number that feels authoritative and is not. We see this constantly: an owner takes a sector range from a guide like this one, applies it to the profit in their accounts, and arrives at a figure that is out by a third in either direction before any negotiation has even begun.
The reason is that normalisation usually moves value further than sector choice does. Replacing an owner's below-market salary with the real cost of employing someone to do that job, stripping out private motoring and family payroll, removing a genuinely one-off cost, or correcting the treatment of work in progress will routinely change the earnings figure by twenty or thirty per cent. Move the earnings by thirty per cent and the value moves by thirty per cent, whichever multiple is used. Argue the multiple from four to four and a half and the value moves by around twelve. The argument most owners have with a buyer is about the multiple; the money is almost always in the earnings.
A sector average is also an average of businesses that have very little in common beyond their trade code. That is why the columns above tell you where the top and the bottom of each range are earned: the position within the range is the useful information, and it is decided by the factors set out in the previous section, not by the sector label.
Sector by sector
Care homes & supported living — 5× – 9× normalised EBITDA
Care is one of the few UK SME sectors where a well-run business reliably attracts institutional money, and we value it on normalised EBITDA with rent and management costed at market rates. In our experience the rating and the occupancy trend move the figure more than the size of the home does. Per-bed cross-checks — roughly £30,000–£50,000 per bed for modest homes and well over £100,000 for modern, purpose-built stock with high private fee income — are a sense test, not the valuation.
Dental practices — 4× – 9×
Dental has a deep and competitive buyer pool, so the ceiling is set by how transferable the income is rather than by demand. We would expect the largest single adjustment to be the cost of replacing the principal's clinical hours at market associate rates. Goodwill percentages of gross fee income are a helpful cross-check alongside the earnings multiple.
Veterinary practices — 5× – 12×
Consolidator appetite has made veterinary one of the highest-rated sectors we value, but the premium is paid for scale and clinical staffing, not for the sector label. We see a marked step up once a group has two or more sites and a clinical director who is not the seller. Health-plan subscriptions are treated as the most durable part of the income.
Opticians & pharmacies — 4× – 8×
These are earnings businesses with a well-understood per-item or per-test cross-check behind them, and buyers use both. In our experience the risk that matters most is professional cover: a business that cannot be staffed without the owner is priced accordingly. Lease length is a live issue in optical, where fit-out cost is high relative to profit.
Nurseries & childcare — 4× – 9×
Nursery value turns on occupancy and payroll percentage more than on anything else, and both are visible in the monthly figures rather than the annual accounts. We would expect a group with settled management to clear a single owner-run setting comfortably. Funded-hours exposure caps the top of the range because the fee is set elsewhere.
Pubs & restaurants — 1× – 2× (leasehold); owned pubs dependent on freehold value
This is the sector with the widest spread on our list, and almost all of it is tenure. A freehold pub is priced as property plus trade; a leasehold site is priced on what an incoming operator can earn after paying themselves properly. We see many leasehold businesses that will not support a multiple at all once a market-rate manager is costed in.
Hotels & holiday parks — 2× – 10×
Parks and hotels sit in the same table but behave very differently: recurring pitch fees are the closest thing the leisure sector has to subscription income, and they are rated accordingly. Hotels are priced off adjusted trading profit with an explicit deduction for deferred capital expenditure. In our experience an unfunded refurbishment backlog costs more in the price than it would have cost to do.
Funeral directors — 3× – 6.5×
Call volume trend is the number a buyer studies first, because it is the closest proxy for market share in a local area. We would expect prepaid plan liabilities to be examined line by line and deducted where they are not properly backed. Freehold chapels and vehicles are valued separately from the goodwill.
Estate & letting agencies — 2.5× – 6×
Managed lettings income is recurring and predictable; sales commission is neither, and buyers price the two halves of the same business quite differently. We cross-check the lettings side against annual managed fee income as well as on earnings. An agency that can show three years of landlord retention will sit at the top of its range.
E-commerce & D2C — 2× – 6×
The decisive question is whether the demand belongs to the brand or is rented from a platform each month. We see very different outcomes for two stores with identical revenue where one has repeat customers and the other has paid traffic. Subscription or replenishment revenue earns a premium to the ranges shown.
Software & SaaS — 6× – 12×
We value SaaS on profit as the anchor and use the ARR multiple as the cross-check, not the other way round, because revenue multiples flatter businesses that are not actually profitable. Net revenue retention is the single most informative metric a seller can produce. Bespoke and implementation income is rated far below subscription income.
IT managed services — 3× – 8×
Contracted MRR is the value in an MSP; break-fix income barely moves the needle. We would expect a buyer to test the contract base for notice periods, price-review clauses and how much of it is truly signed. Client tenure of several years with documented renewals supports the top of the range.
B2B & professional services — 3.5× – 5.5×, 6×+ for recurring-revenue leaders
The distinction that matters here is retained versus project income, and it is worth more than any refinement of the multiple. In our experience buyers discount heavily where the founder is the main fee earner and the main salesperson. Written contracts with notice periods are the cheapest value uplift available to most owners in this sector.
Accountancy practices — 3× – 5×
Practices still change hands on a multiple of gross recurring fees, and we use that alongside the earnings multiple rather than instead of it. Deal structure matters more here than almost anywhere else, because fee retention is typically warranted over one to two years. A practice where clients are used to dealing with a manager transfers far better than one where they are not.
Recruitment agencies — 2× – 6×
We value recruitment on net fee income, not turnover, and the temp book is generally worth more per pound than perm because it recurs. In our experience the top of the range is only reached where consultant retention can be evidenced over several years. Client concentration in a single sector or single account pulls the figure down quickly.
Start-ups & early stage — Method-led, not multiple-led
We do not publish an earnings multiple for pre-revenue and early-stage businesses because there is nothing dependable to apply it to. Where there is early recurring revenue, an ARR basis is used and cross-checked against the last funding round. For everything earlier, the value sits in the evidence of what investors have actually paid.
Manufacturing & engineering — 3.5× – 8×
Accreditation and the barrier to entry it creates are the clearest dividing line we see in manufacturing valuations. Earnings should be taken through a cycle rather than from the best year, because order books move. Plant and machinery are valued on what they are worth in use, net of any finance secured on them.
Construction & contracting — 2.5× – 6×
Construction is rated below most sectors because the earnings are project-based and the balance sheet carries real risk in retentions and work in progress. A framework or an approved-supplier position is the single strongest argument for the upper half of the range. We would expect a buyer to scrutinise contract terms for liability and defects exposure well beyond completion.
Haulage & logistics — 2.5× – 6×
Fleet value net of finance is a balance-sheet matter and is dealt with separately from the earnings multiple, which is where a lot of confusion arises. Contracted work is worth materially more than spot work of the same value. O-licence compliance and driver retention are both examined before a price is confirmed.
Cleaning & facilities — 2× – 7×
Contract length and retention carry this sector: a book of one-month-notice contracts is worth a fraction of the same revenue on three-year terms. We would expect wage-increase pass-through to be tested contract by contract, because it determines whether the margin is real. TUPE exposure is a negotiation point rather than a discount in itself.
Garages & MOT stations — 1.5× – 4.5×
Labour recovery rate tells us more about a garage than turnover does, and technician retention tells us whether the recovery rate survives a sale. We see many sites where the freehold is worth more than the trading business, and the two are valued separately. Equipment age and deferred maintenance are deducted rather than ignored.
How to cite this guide
The Business Valuers, UK SME Valuation Multiples Guide, September 2026, thebusinessvaluers.com/business-valuation-multiples-uk
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