What is the most common way to value a UK SME?

For profitable trading businesses, valuers most commonly apply an EBITDA multiple to a normalised, maintainable earnings figure. The multiple reflects sector, size, growth and risk. Asset-heavy or loss-making businesses are typically valued on net assets instead.

What EBITDA multiples do UK SMEs typically sell for?

As a broad guide, profitable UK SMEs in the £500k–£20m turnover range often change hands at 3x to 6x adjusted EBITDA, with strong businesses in sought-after sectors (recurring revenue software, specialist services, healthcare) commanding considerably more. Multiples vary widely by sector, scale, growth and buyer type.

Is a free online business valuation calculator accurate?

Online calculators apply a generic multiple to headline profit and ignore the adjustments, sector data and risk factors that drive a real valuation. They can be useful for a rough sense check but should not be relied on for negotiation, tax or any decision with money attached.

How long does a professional business valuation take?

A bespoke written valuation from The Business Valuers is delivered within 72 hours of receiving your financial information, for a fixed fee typically of £495.

Will a valuation for HMRC or probate give the same figure as a market valuation?

No. The standard of value changes with the purpose. HMRC and probate valuations use a 'hypothetical' open-market basis with specific case-law adjustments (such as discounts for minority holdings), and typically produce lower figures than a marketing valuation aimed at finding the best strategic buyer.

Insights

How to value a business in the UK: a practical guide

Whether you're preparing for a sale, considering a management buyout, settling a tax position with HMRC, or simply curious what your company is worth, the mechanics of UK business valuation are more knowable than they appear. This guide walks through the three methods professional valuers use, the figures that matter, and what realistic multiples look like in the UK SME market.

Step 1 — Start with the right profit figure

Every credible valuation begins by stripping the published P&L back to a normalised, maintainable EBITDA — what the business genuinely earns for a new owner, year in, year out. Typical adjustments include removing the owner's above-market salary and personal expenses, one-off costs (a legal settlement, a rebrand, COVID-era exceptionals), and any income that won't recur. The cleaner this figure, the more defensible everything that follows.

Step 2 — Apply the right method

UK valuers triangulate between three approaches:

Earnings multiple (EBITDA × multiple). The primary method for profitable trading businesses. Adjusted EBITDA × a sector multiple.
Net asset value. The dominant method for asset-heavy businesses (property, plant, stock) and the floor for most others.
Discounted cash flow (DCF). Valuable where there are credible forecasts — typically used to support rather than override the multiple-based answer.

Step 3 — Pick a realistic multiple

UK SME multiples vary enormously by sector and scale, but as a broad orientation:

Owner-managed service businesses, small contracting, retail: roughly 2x – 4x adjusted EBITDA.
Established B2B services, specialist trades, healthcare: roughly 4x – 6x.
Recurring-revenue software, regulated specialists, scarce-skill businesses: 6x – 10x+, sometimes more for strategic buyers.

These ranges only set expectations. The actual multiple depends on growth, customer concentration, owner dependence, margin trend and the strategic value to a specific buyer.

Step 4 — Adjust for risk and transferability

Two businesses with identical EBITDA can be worth twice the difference depending on five factors:

Recurring revenue — contracted income beats win-again income.
Customer concentration — one client at 40% of turnover compresses the multiple sharply.
Owner dependence — if the business is the owner, much of the value walks out at completion.
Growth and margin trend — direction matters as much as the absolute number.
Quality of information — clean accounts and management info reduce buyer risk and the discount applied for it.

Step 5 — Match the valuation to its purpose

The same business genuinely has different values depending on why you're asking:

Selling — market value aimed at the best realistic buyer.
Buying — independent figure to inform an offer and avoid overpaying.
Management buyout — fair value defensible to both sides and a lender.
HMRC and probate — hypothetical open-market basis with case-law adjustments.
Shareholder disputes — fair value that holds up under legal scrutiny.

Common questions

What's the difference between EBITDA and SDE?

EBITDA is used for larger or owner-light businesses where the owner is replaceable by a hired manager (whose salary stays in the costs). SDE (seller's discretionary earnings) is more common for very small, owner-operated businesses where the owner's full benefit package is added back. UK SME valuations above ~£1m EBITDA almost always use adjusted EBITDA.

Should I get a valuation before or after speaking to a broker?

Before. A "free" broker valuation has a job other than being accurate — winning your instruction. Knowing your independent number first means you can judge whether a broker's pitch is realistic.

Do I need a valuation if I'm not selling?

Owners commission valuations for share schemes, divorces, partner exits, succession planning, raising finance, and simply to know what the largest asset they own is worth. Selling is one trigger of many.

Getting a real figure

A guide gives you orientation; it doesn't give you a number you can negotiate from, defend to HMRC, or rely on in court. For that you need a bespoke valuation grounded in your actual figures and recent comparable UK transactions in your sector.

At The Business Valuers we produce independent, written valuations for UK SMEs, delivered in 72 hours for a fixed fee typically of £495. Because we don't sell businesses, the figure has no incentive in either direction. Get in touch if you'd like to know what yours is genuinely worth, or read our companion guide on how much your business is worth.