How much is my business worth?
There's no single correct price for a business — only a defensible range. Most UK trading businesses are priced off a multiple of adjusted (normalised) EBITDA, with the multiple set mainly by size, sector, growth and how dependent the business is on its owner. This guide explains the method, typical multiple ranges, what pushes a multiple up or down, and the tax to plan for when you sell.
By the bizflip team · Published 29 August 2026 · Facts checked 29 August 2026 · Sources listed below
How UK buyers price a business
Most professional buyers, corporate finance advisers and business brokers value a trading UK SME the same way: take an adjusted earnings figure, then multiply it by a number that reflects risk and growth prospects. Two things set the price — the earnings figure, and the multiple applied to it.
The earnings figure is usually EBITDA: earnings before interest, tax, depreciation and amortisation. It strips out financing costs, tax and non-cash accounting charges, leaving a rough approximation of the cash the business generates from trading, before you account for how it happens to be funded.
Raw EBITDA from the annual accounts is then adjusted, or 'normalised', before a multiple is applied. Normalisation removes one-off and owner-specific items that don't reflect ongoing trading — an above-market director's salary, personal costs run through the business, one-off legal or professional fees, and non-recurring repairs are typical add-backs. In the US, this adjusted figure is often called seller's discretionary earnings (SDE), mainly for very small, owner-operated businesses. UK practice doesn't generally use that label — the same adjustment is usually just called adjusted or normalised EBITDA — but the idea is the same, and so is the requirement to justify every add-back with evidence rather than assertion.
Typical multiples for UK SMEs
There's no fixed formula for the multiple — it's set by negotiation and buyer appetite at the time of sale, not read off a table. UK corporate finance advisers report working ranges roughly as follows.
| Business profile | Typical multiple of adjusted EBITDA |
|---|---|
| Smaller, owner-managed SMEs | Roughly 3x to 5x |
| Higher-performing SMEs (£1m–£20m turnover) in in-demand sectors — e.g. precision engineering, B2B technology | Roughly 6x to 10x |
Where a given business lands within, or outside, these ranges depends on the quality factors below, not just its size. At the smaller end, some very small or lower-margin businesses don't have enough separable, provable profit to support an EBITDA multiple at all — those are more often priced against net assets or a modest multiple of turnover instead.
What moves the multiple up or down
- Owner dependency. A business that cannot run without the current owner working full time carries transition risk, and buyers discount heavily for it.
- Recurring or contracted revenue. Subscription income, retainer contracts and high repeat-purchase rates support a higher multiple than one-off project work.
- Customer concentration. One customer accounting for a large share of revenue is a red flag; buyers price in the risk of losing them.
- Record quality. Clean, reviewed accounts with a clear paper trail for every add-back are easier for a buyer's accountant to underwrite than numbers that rely on the owner's word.
- Profit trend. A rising three-year profit trend supports the top of the range; flat or falling profit pulls toward the bottom.
- Management depth. A business with managers who can run day-to-day operations without the owner is worth more than one where every decision runs through them.
- Sector demand. Buyer appetite for a sector at a given time — trade consolidation, private equity interest — moves multiples independently of any single business's own performance.
Other ways a business gets valued
EBITDA multiples work best once a business is reliably profitable and the profit is large enough to normalise with confidence. Two other methods turn up in UK SME sales.
- Net asset valuation. Used where profit is thin or negative relative to the value tied up in property, stock, plant or equipment. The starting point is the balance sheet, not the profit and loss account.
- Discounted cash flow (DCF). Used for larger or fast-growing businesses where a single current-year multiple doesn't capture future cash flow well. Less common for small owner-managed sales, because the answer is sensitive to the growth and discount-rate assumptions fed into it.
A credible valuation usually checks the EBITDA-multiple answer against at least one other method, rather than relying on a single number.
The tax to plan for when you sell
How you sell changes what tax is due. Shareholders selling company shares, or a sole trader or partner selling their business, generally pay Capital Gains Tax (CGT) on the gain personally. If the company itself sells its trade and assets, rather than the shareholders selling their shares, the company pays Corporation Tax on any gain first, before you can extract the proceeds.
Business Asset Disposal Relief (BADR) reduces the CGT rate on qualifying gains, up to a lifetime limit of £1 million. The rate is 14% for disposals between 6 April 2025 and 5 April 2026, rising to 18% for disposals from 6 April 2026. To qualify, you generally need to have owned the business — or held at least 5% of the shares and voting rights while working as an employee or director — for at least two years before the sale.
Without BADR, standard CGT rates apply: 18% within the basic-rate band and 24% above it, after a £3,000 annual tax-free allowance for the 2026–27 tax year.
If a company sale is structured as an asset sale, Corporation Tax applies first — 19% on profits up to £50,000, 25% on profits above £250,000, with marginal relief tapering the rate in between.
This is general information, not personalised advice. Whether BADR applies to you, and whether a share sale or asset sale is more tax-efficient, depends on your ownership structure and history. Check with your accountant or a tax adviser before you agree a deal.
Getting a number you can rely on
An EBITDA multiple gives you a working range, not a final price. The actual price is set by negotiation, due diligence findings, and how many buyers you have competing for the business. Get an indicative figure first, then have it checked by an accountant or a professional valuer before you put a number in front of a buyer — especially if part of the price rests on add-backs. If you decide to test the market, listing a business for sale on bizflip is free.
Sources
Every load-bearing claim in this guide, and where it comes from:
- Business Asset Disposal Relief cuts the CGT rate on qualifying gains to 14% for disposals between 6 April 2025 and 5 April 2026, rising to 18% for disposals from 6 April 2026, up to a £1 million lifetime limit. — GOV.UK (HMRC)
- To qualify for Business Asset Disposal Relief you generally need to have owned the business, or held at least 5% of shares and voting rights while being an employee or director, for at least two years before the sale. — GOV.UK (HMRC)
- Standard Capital Gains Tax rates outside Business Asset Disposal Relief are 18% within the basic-rate band and 24% above it, after a £3,000 annual tax-free allowance for the 2026-27 tax year. — GOV.UK (HMRC)
- Corporation Tax is 19% on profits up to £50,000 (small profits rate) and 25% on profits above £250,000 (main rate), with marginal relief tapering the rate between those thresholds. — GOV.UK (HMRC)
- UK corporate finance advisers report smaller SMEs typically trading at 3x to 5x EBITDA, with higher-performing SMEs (£1m-£20m turnover) in in-demand sectors such as precision engineering or B2B technology commanding 6x to 10x EBITDA. — Hilton Smythe, 2026 UK M&A Playbook
Ready for your own number? The valuation calculator is free and ungated, and its methodology is public.