Press & media / Commentary

The SME size discount: what small UK businesses sold for in H1 2026

Two independent UK datasets point the same way. Businesses sold for under £2.5m changed hands at a median 3.7x EBITDA in the first half of 2026, while the wider market paid 6.0x. For owners of smaller businesses, it is the number that matters most before a sale.

James Nelson · 15 October 2026

Data: H1 2026 (January to June 2026). This page is refreshed after each half-yearly MarktoMarket and Dealsuite release, next due February 2027.

The headline multiple is the one owners read, but it isn't the one most of them are paid. In the first half of 2026 a business sold for under £2.5m fetched a median of 3.7 times profit, not 6. Knowing which band you're in before you go to market is worth more than any negotiating tactic.

UK businesses sold for under £2.5m changed hands at a median 3.7x EBITDA in the first half of 2026, against 6.0x for all deals under £250m, according to MarktoMarket's H1 2026 UK M&A Valuation Indices. Dealsuite's adviser survey for the same period shows the same pattern, rising from 3.6x at £200,000 of EBITDA to 8.2x at £10m.

What multiple do small UK businesses sell for in 2026?

The two datasets measure different things. MarktoMarket tracks completed deals, while Dealsuite asks advisers what multiples they are seeing. That they agree on the size gap is the point. A smaller business is not valued on the same terms as the market average.

For sector ranges, see our UK business valuation multiples by sector.

How big is the size discount in pounds?

The gap is easiest to see per pound of profit.

• At Dealsuite's 3.6x, a business earning £200,000 EBITDA has an enterprise value of about £720,000.
• The same £200,000 at the 5.4x UK&I average would be £1,080,000.
• At the £10m EBITDA level, each pound of profit is valued at £8.20, against £3.60 at £200,000. That is less than half.

The same applies to owners who benchmark against the headline. An owner who reads 6.0x and applies it to £300,000 of profit expects about £1.8m. The median for deals of that size points to about £1.1m.

Why do smaller businesses sell for lower multiples?

Each pound of profit in a small business carries more risk for a buyer.

• Owner dependence. In many businesses under £2.5m, customers, suppliers and know-how sit with the owner. Buyers price in the risk that profit leaves with them.
• A smaller buyer pool. Private equity and larger trade buyers rarely look below a minimum size, so smaller businesses sell mainly to individuals and smaller trade buyers.
• Harder to finance. Smaller deals rely more on bank debt with personal guarantees, vendor loans and deferred consideration. That lowers the price a buyer can pay upfront.
• Diligence costs. Legal and accounting costs are similar in pounds whatever the deal size, so they take a bigger share of a small deal.
• Concentration. A few large customers, or one key employee, are far more common in a small business.

Has the gap narrowed since 2025?

Slightly, at the smaller end. Dealsuite's £200,000 band has risen from 3.1x in H1 2025 to 3.3x in H2 2025 and 3.6x in H1 2026. Over the same period the £10m band eased from 8.5x to 8.4x and then 8.2x. The gap between them is now 4.6 turns, down from 5.1 in H2 2025.

MarktoMarket's Nano Cap index moved from 3.6x for FY 2025 to a provisional 3.7x, while its All-Cap index eased from 6.2x to 6.0x. MarktoMarket's FY 2025 comparatives on its H1 2026 page differ slightly from its earlier FY 2025 release, so we quote them as the publisher now states them.

The deal mix has also shifted. Deals below £2.5m fell from 42% to 32% of those reported by Dealsuite's advisers in H1 2026, while deals above £10m rose from 15% to 19%.

Why are so many sellers asking too much?

Advisers judged the seller's price expectation too high in 49% of UK and Irish sale processes in H1 2026, by a typical 23%, and 24% of those processes broke down, according to Dealsuite.

Much of that gap comes from the size discount. Owners hear about headline multiples and successful sales by larger businesses, and expect the same terms.

How can an owner narrow the discount before selling?

None of these change the market, but each moves a business up within its band.

• Reduce owner dependence. Build a management layer and document how the business runs, so a buyer can see it working without you.
• Contract the revenue. Retainers, maintenance contracts and repeat customers on terms give a buyer visibility of next year's profit.
• Spread the customer base. No single customer should be a large share of revenue.
• Normalise the accounts early. A buyer will adjust profit for owner pay and one-off costs anyway. Set out the add-backs that survive diligence before they do.
• Give it time. Most of these changes take 12 to 24 months to show in the figures.
• Know your number. An independent valuation applies the multiple for your size and sector, not the headline average. See how much is my business worth.

How The Business Valuers uses this data

Every valuation we produce is benchmarked against transaction evidence for the business's size and sector, alongside the published indices. We refresh this page after each half-yearly MarktoMarket and Dealsuite release, on the same URL. Dealsuite normally publishes in February and August, MarktoMarket in February and mid-year.