Management buyout

A buyout figure both sides can stand behind.

An MBO valuation from The Business Valuers is an independent written valuation of the business, fixed fee from £495 and delivered in 3 working days from receipt of the information we need. It gives the selling owner and the buying management team one figure, built on one set of assumptions, that both sides can rely on.

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.

MBO valuations from £495. We agree the fixed fee before starting.

Independent.We don't sell businesses. No success fee.

1,000+ UK business valuations
17 years of brokering & valuing experience
Fixed fee from £495 — no hourly billing
Report delivered in 3 working days

When you need this.

—An owner is planning to exit and sell to the existing management team rather than market the business.
—A management team needs a figure a lender will accept to support buyout funding.
—Either side wants an independent number that protects the working relationship after completion.
—Part of the consideration will be deferred, and both sides need the underlying figure agreed first.

How we value it.

Every report triangulates a normalised-EBITDA earnings multiple as the primary method, a net asset valuation, and a discounted cash flow cross-check, benchmarked against comparable transactions. For an MBO we assess maintainable earnings on a forward, post-completion basis, accounting for the owner's exit, any resulting change to the management structure, and the real run-rate of the business once the deal completes.

Fairness to both sides matters more in an MBO than almost any other transaction, because the owner and the management team typically have years of trust between them and the most to lose if the figure feels one-sided. We also take the funding constraints the management team is working within into account, so the figure is one they can realistically finance, not just one that looks fair on paper.

Illustrative example

An owner-manager steps back.

A facilities management company's founder wants to sell to three senior managers. Reported EBITDA is £350,000, but the founder draws a salary well below market rate. Normalising for a market-rate replacement manager brings maintainable EBITDA to £290,000. Applying a benchmarked multiple of 4x gives an enterprise value of £1.16m. After net debt of £60,000, the equity value is £1.1m, which the report sets out alongside the normalisation and the comparable evidence, so the funding bank, the owner and the team are all working from the same figure.

What you'll need to provide.

—Statutory accounts for the last three years.
—The most recent management accounts.
—A short note on the proposed structure, including who is buying and any deferred consideration.

If anything is missing, we will tell you what matters and what doesn't.

What we don't do.

—We are not tax advisers. We don't advise on how the deal or any deferred consideration is structured for tax purposes; that is for your accountant or tax adviser.
—We are not RICS-regulated. Where the business owns freehold property, we use an agreed property value, or value the business debt free, cash free, excluding the freehold.
—We don't arrange funding and don't sell businesses.

This is for you if…

—You're an owner selling to your management team and want a fair, defensible price.
—You're a management team that needs a figure a lender will accept.
—You need a number that protects the working relationship after completion.

Frequently asked.

What is an MBO valuation?

A management buyout valuation is an independent written valuation of the business prepared when the existing management team is buying it from the owner. It sets out a figure that is fair to both sides, the method used and the evidence behind it, so the deal can proceed on a number neither party had to invent.

How much does an MBO valuation cost?

Fixed fee from £495, agreed before any work starts. Complex or multi-entity matters are quoted individually.

How long does it take?

A written report in 3 working days from receipt of the information we need, usually the statutory accounts and recent management accounts.

Who instructs the valuation, the owner or the management team?

Either can instruct us, but we act independently of both. We produce one report, built on one set of assumptions, that both the selling owner and the buying management team can rely on.

Will a lender accept the figure for funding the buyout?

We provide an independent, evidenced valuation that sets out our method and the information relied on, which is the kind of figure lenders typically want to see behind an MBO facility. Acceptance of any individual funding application is a matter for the lender.

Does the valuation account for how the business will run after the owner leaves?

Yes. We assess maintainable earnings on a forward, post-completion basis, accounting for the owner's exit, any change in management structure, and the funding constraints the buying team is working within.

What don't you do?

We are not tax advisers, so the report does not cover how the deal or any shareholder loan is structured for tax purposes, and we are not RICS-regulated, so where the business owns freehold property we use an agreed value or value the business debt free, cash free, excluding the freehold.

Get an independent MBO valuation.

A fixed-fee report both sides can rely on, from £495.