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£148,000
Central value of the whole company
Read the case study →Construction and infrastructureShareholder exit
Shareholder exit: two owners selling, two deciding whether to buy
Details have been anonymised and some figures rounded to protect client confidentiality.
- Sector
- Highways testing contractor
- Purpose
- Buyout of two retiring shareholders
- Size
- c.£400,000 turnover
- Region
- The Midlands
£554,000
Central value of the whole company
£138,500
Each 25% holding, pro rata
£275,000 to £190,000
Reported EBITDA to maintainable EBITDA
2 reports
Full report for the buyers, neutral copy for the sellers
The situation
Four people each held 25% of a long-established contractor. Two wanted to sell. The other two needed to know whether to buy, and at what price, while keeping relations good.
The difficulty
Reported profit looked very strong, but the owners drew small salaries and took most of their income as dividends. Around 75% of turnover came from one customer with no contract, although the firm had been an approved contractor for 17 years.
What we did
We charged market pay for the three roles a buyer would need to fill, about £100,000 a year with employment costs, bringing reported EBITDA of £275,000 down to a maintainable £190,000. The multiple reflected both the strong margins and debt-free balance sheet and the customer concentration. Surplus cash was added only after the corporation tax bill due. Within the same fee we produced two reports: a full one for the possible buyers and a neutral, value-only version to share with the sellers.
The outcome
Whole company value of £506,000 to £601,000, central £554,000. Each 25% holding was £138,500 pro rata, and the two selling holdings together £277,000.
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