Business valuation calculator.
A profitable UK business is usually valued as a multiple of its maintainable earnings: profit adjusted for the owners' pay, one-off items and personal costs. The multiple gives the enterprise value. Add surplus cash, subtract debt and adjust for working capital to reach the equity value, which is what the shareholders receive.
Work through each step with your own figures and your own multiples, then copy the workings or download them as a Word file. Free, no signup.
How do you value a business in the UK?
For a profitable trading business the usual starting point is the earnings multiple method, and it is the one the calculator follows. Each step below matches a part of the form.
Maintainable earnings.
Take the profit for the last full year: EBITDA, or profit before tax for a small owner-run business. Adjust it to what a new owner could expect to keep earning. Add back costs that will not recur and costs that benefit the owners personally, deduct income that will not recur, and replace what the owners pay themselves with the market cost of someone to do their job.
A multiple.
Multiply the maintainable earnings by a low and a high multiple. The multiple reflects how risky and how lasting the profit is. It comes from deals for comparable businesses, not from a formula, so the calculator asks for your own figures.
Enterprise value.
Earnings times the multiple is the enterprise value: the price for the business on a cash-free, debt-free basis, with a normal level of working capital. Offers and heads of terms are usually quoted on this basis.
Equity value.
Add surplus cash, subtract debt and debt-like items, and adjust for working capital above or below its normal level. The result is the equity value: what the shareholders receive for their shares, before their costs and tax.
A cross-check.
For a business with valuable property, equipment or stock, compare the equity value with the net assets adjusted to market value. Net assets already count the cash and the debt, so they compare with the equity value, not the enterprise value.
What adjustments go into maintainable earnings?
Buyers call them normalisation adjustments, or add-backs. Each one needs evidence, because the buyer's accountant will test it in due diligence, and an add-back that cannot be supported rarely survives into the final price.
| Adjustment | Effect | Example |
|---|---|---|
| Owners' pay above the market rate | Add back | A director paid £150,000 for a role a buyer could fill for £90,000, including employer's National Insurance and pension |
| Owners' pay below the market rate | Deduct | An owner on a small salary who takes the rest as dividends, which are not a cost in the accounts |
| One-off costs | Add back | A legal dispute, an office move or a restructuring |
| Personal costs | Add back | A car or phone used by a family member, or travel that was not for the business |
| One-off income | Deduct | A grant, an insurance payout, or a profit on selling equipment or property |
| Rent on premises an owner owns | Either | Rent above the market rate is added back; rent below it is deducted |
| Family on the payroll | Add back | Pay for relatives who do not work in the business |
| Interest, from profit before tax only | Add back | Interest on loans repaid at the sale, because the loans themselves come off the price |
What affects the multiple?
Two businesses with the same profit can sell for very different prices. A buyer pays more for profit that is likely to last and grow, and less for profit that rests on things that may not stay.
| Factor | Pushes the multiple up | Pushes it down |
|---|---|---|
| Owner dependence | A management team that runs the business day to day | Customers, suppliers and know-how tied to the owner |
| Customer concentration | Revenue spread across many customers | A large share of revenue from one or two customers |
| Recurring revenue | Contracts, subscriptions or customers who buy again | One-off projects that have to be won again each year |
| Growth | Profit rising year on year, with a forecast that holds up | Flat or falling profit |
| Sector | A sector buyers are looking to enter or grow in | A sector buyers see as shrinking or hard to finance |
| Size | Larger profit, which brings more buyers able to compete | Smaller profit, with fewer buyers and more riding on each customer or employee |
| Quality of the numbers | Monthly management accounts that agree with the filed accounts | Accounts that need explaining, or add-backs without evidence |
To find a multiple, ask an accountant, a business broker or a corporate finance adviser for the multiples paid in recent deals for businesses of your sector and size, and check whether each is a multiple of EBITDA or of profit before tax. The calculator's starting figures of 4 and 6 are an illustration, not a market rate.
What is the difference between enterprise value and equity value?
Enterprise value is the price for the business; equity value is the price for the shares. Most offers for a UK company are made on a cash-free, debt-free basis, and these items turn one into the other.
| Item | Effect on the price | What it covers |
|---|---|---|
| Surplus cash | Added | Cash above what the business needs to trade day to day |
| Debt | Subtracted | Bank loans and overdrafts, asset finance and hire purchase, loans from the owners |
| Debt-like items | Subtracted | Corporation tax owed for the time before the sale, bonuses earned but not paid, dividends declared but not paid, deferred payments for past acquisitions |
| Working capital | Added or subtracted | The gap between the stock, customer debts and supplier balances handed over and their normal level |
How do completion accounts and a locked box settle the price?
The calculator estimates the cash, debt and working capital before a deal. The sale agreement settles the real figures in one of two ways, and the choice is best made in the heads of terms.
Completion accounts.
Accounts are drawn up for the completion date, within an agreed period after it, and the price moves pound for pound for the actual cash, debt and working capital against the figures assumed in the agreement. The final price is not known until those accounts are agreed.
Locked box.
The price is fixed on a balance sheet at an earlier date, the locked box date, so the cash, debt and working capital are known when the price is agreed. The sellers promise that no value leaves the business between that date and completion, such as dividends, bonuses or other payments to them, apart from any leakage the agreement permits.
The heads of terms builder sets out the price, the working capital target and either mechanism, and the heads of terms guide explains what to agree before exclusivity starts. The completion accounts guide covers the peg, the timetable and how disputes over the figures are settled.
When does a net asset valuation make more sense?
When the value of a business sits in what it owns, such as property, plant or stock, or when it makes little or no profit, buyers look at its net assets: total assets less total liabilities, with property and equipment restated at market value and anything a buyer will not pay for written off, such as stock that will not sell or debts that will not be collected. If the net assets are worth more than the earnings support, the asset value can act as a floor on the price. If the earnings are worth more, the difference is goodwill.
What tax will I pay on the sale?
The equity value is before tax. Your share of the price, less your selling costs and what you paid for the shares, is your gain for capital gains tax. The Business Asset Disposal Relief calculator works out the tax with and without the relief, which taxes qualifying gains at 18% up to a £1 million lifetime limit for disposals from 6 April 2026.
Valuation is one step of a sale. For the rest, from preparing the accounts to completion, read how to sell a business in the UK, and draft the paperwork with the NDA template builder and the heads of terms builder.
Frequently asked.
How much is my business worth?
Only an offer settles it, but for a profitable business the usual starting point is maintainable earnings times a multiple. Maintainable earnings are the reported profit adjusted for the owners' pay, one-off items and personal costs. The multiple comes from deals for comparable businesses. Add surplus cash, subtract debt and adjust for working capital to reach the equity value the shareholders receive.
What multiple of profit do UK businesses sell for?
There is no single figure. The multiple depends on the sector, the size of the business, its growth, and how much of the profit depends on the owner or on a few customers, and it moves with the market. Smaller owner-run businesses usually sell on lower multiples than larger ones with a management team and recurring revenue. An accountant, business broker or corporate finance adviser can give you multiples from recent deals like yours.
What are add-backs in a business valuation?
Costs in the accounts that a new owner would not carry, added back to profit to reach maintainable earnings: owners' pay above the market rate for the role, one-off costs such as a legal dispute, and personal costs run through the business. It works the other way too. One-off income is deducted, and so is the extra cost of a market-rate manager when the owners pay themselves less, for example a small salary plus dividends.
What does cash-free, debt-free mean?
The price is set as if the business had no cash and no borrowing, with a normal level of working capital. The price paid for the shares then adds the surplus cash in the business and subtracts its debt and debt-like items, such as corporation tax owed for the time before the sale, with a further adjustment if working capital is above or below its normal level.
What is the difference between a locked box and completion accounts?
Both settle the cash, debt and working capital in the price. With completion accounts, accounts are drawn up after completion and the price moves up or down for the actual figures on the day. With a locked box, the price is fixed on a balance sheet at an earlier date, and the sellers promise that no value, such as dividends or bonuses, leaves the business between that date and completion.
Is this a formal valuation, and is my data stored?
No. It is an estimate from your own figures and your own multiples, not a valuation or advice. For a sale, a tax matter, a divorce or a shareholder dispute, use an accountant or a qualified valuer. The calculator is free with no signup and keeps your figures in your browser. The Word download sends them once to build the file, and they are not stored on our servers or logged.