How to Value a Business in the UK (And What Actually Moves the Number)

Every owner asks the same question eventually: what is this thing worth? Usually it arrives with something else attached. An approach from a competitor. A birthday with a zero on it. A year of trading that felt harder than it should have. Whatever prompts it, the answer matters well before you ever think about selling, because the things that make a business valuable are the same things that make it a good business to own.

I sit on both sides of this. I run businesses of my own, and through my M&A partnership I see what buyers actually pay, which is often a long way from what sellers expect. This is the honest version: how UK businesses are valued in 2026, and more importantly, what moves the number.

The formula, and why it is the easy part

For most owner-managed UK businesses, valuation is a multiple of adjusted EBITDA. Earnings before interest, tax, depreciation and amortisation, adjusted to reflect what the business would earn under someone else's ownership.

So: value = adjusted EBITDA x multiple. Two variables. Owners spend almost all their attention on the first one and almost none on the second, which is backwards, because the multiple is where the leverage is. Add £100K of profit to a business on a 4x multiple and you have added £400K of value. Move that same business from 4x to 6x and you have added twice as much without selling anything new.

Other methods exist. Asset-based valuation matters for property-heavy or asset-rich businesses. Revenue multiples show up in software and in high-growth situations where profit is deliberately suppressed. Discounted cash flow gets used in larger transactions and in arguments. But for a profitable UK service business between £1M and £50M of revenue, adjusted EBITDA times a multiple is the conversation you will actually have.

Getting to adjusted EBITDA honestly

Adjusted EBITDA is not your accounts EBITDA. It is what the business would earn for a new owner, which means a set of add-backs and, crucially, some subtractions that owners tend to forget.

Buyers will usually accept adding back an owner's salary above market rate, genuine one-off costs such as a legal case or a relocation, personal expenses that have run through the business, and any spend that clearly will not recur.

What they will subtract is the part owners resist. If you take £40K while doing the work of a £90K operations director, a buyer adds a £90K cost, because they will have to hire one. The same applies to a spouse doing the books unpaid, to under-invested equipment, and to deferred maintenance. Adjustments run both ways, and a good buyer's advisor will find the ones running against you.

What multiple should you expect?

Ranges for UK owner-managed businesses in 2026, before any deal-specific adjustment:

Size itself is a multiple driver. The same business earning £1M of EBITDA is worth proportionally more per pound of profit than one earning £250K, because bigger businesses have more management depth, attract more buyers, including private equity, and carry less risk that one departure breaks them.

The five things that actually move your multiple

This is the part worth your attention, because unlike the market's ranges, all five are inside your control.

1. Owner-dependence. The single biggest discount. If the answer to "what happens if the owner takes three months off" is "the business struggles", you are selling a job rather than an asset. Buyers price that risk into the multiple, and more painfully into the structure: longer earn-outs, more money deferred, more conditions attached. Fixing this means management structure, documented processes, and relationships that belong to the business rather than to you.

2. Customer concentration. One client at 40% of revenue is a discount, regardless of how long they have been with you. The usual rule of thumb is that no client should exceed 15% to 20%. This is slow to fix and worth starting years before you need it.

3. Revenue quality. Contracted and recurring revenue is worth more than repeat revenue, which is worth more than project revenue, which is worth more than one-off work. Converting even part of your base to retainers or service agreements moves the multiple, not just the profit. It is the highest-leverage commercial change most service businesses can make.

4. Clean, timely numbers. Management accounts that arrive within two weeks of month end, a stable chart of accounts, and no surprises in due diligence. Messy numbers do not just cost you at the negotiating table; they extend the process, and deals die of exhaustion more often than they die of disagreement.

5. Documented systems. If how the work gets done lives in people's heads, the buyer is acquiring risk. If it lives in documented, followed processes, they are acquiring an operating asset. This is where technology earns its place, not because software is impressive but because a business that runs on systems keeps running when people leave.

Improving profit changes one number. Improving how the business runs changes both.

Where value is destroyed by accident

Some of the most common value-destroying habits look like prudence from the inside.

Running personal costs through the business feels efficient until you have to explain three years of them to a buyer's accountant, and every unexplained item makes the rest of your numbers look less trustworthy. Suppressing profit for tax reasons in the years before a sale directly suppresses the number the multiple is applied to. Under-investing in the team keeps costs down and deepens owner-dependence at the same time. And leaving it until the year before you want out means you have already missed the window, because buyers want to see two to three years of accounts showing the improvements held.

How long this takes

Profit improvements show up inside a year. Multiple improvements are slower, because they are trust claims and trust needs evidence. Recurring revenue has to prove it renews. A management team has to prove it runs things. Customer concentration has to actually come down, in the accounts, over multiple periods.

Realistically: eighteen months to move a multiple meaningfully, three years to transform one. Which is the argument for treating this as an operating discipline rather than an exit project. Every change on that list of five makes the business better to own in the meantime. Less dependent on you, more predictable, easier to run. Nobody regrets doing this work even when they never sell.

Common questions

What multiple do UK businesses sell for?
Most owner-managed UK businesses trade between 3x and 6x adjusted EBITDA. Below roughly £500K of EBITDA you are usually at the lower end. Specialist and recurring-revenue businesses reach 7x to 10x.

How much does owner-dependence really cost?
It rarely appears as a single number. It shows up as a lower multiple, a longer earn-out, and a larger share of the price deferred and conditional on you staying.

Do I need a formal valuation?
Not to start. Formal valuations matter for tax events, disputes and share transactions. For planning, an indicative range from someone who sees real deals in your sector is more useful and considerably cheaper.

Is EBITDA the right measure for my business?
For most profitable service businesses, yes. Asset-heavy businesses, loss-making businesses and high-growth software are valued differently, and if you are in one of those the conversation starts somewhere else.

Should I improve the business or sell it as it is?
Depends on your timeline and your appetite. If you want out within twelve months, focus on clean numbers and a tidy process. If you have two years or more, the five levers above are usually worth far more than they cost.

If you want to understand where profit is hiding in your own numbers before you think about value, that is exactly what the ROI for AI Bootcamp works through: the seven EBITDA drivers, the levers under each, and what to change first. If the operating problems above sound familiar, this is how I work with SME leaders. And if you are seriously considering a sale or an acquisition, that runs through Thomsett Lockey, my M&A partnership.