How to Value Your Business Without Hiring a Broker

1 Normalise your earnings

Remove one-off costs and owner perks from the last full year’s accounts. The corrected profit is your base.

• Salary you paid yourself above market
• Family car or phone put through the company
• Exceptional legal fees or Covid grants

2 Pick the right earnings yardstick

• Turnover under £1 m and owner-managed: use Seller Discretionary Earnings (SDE)
• Turnover £1 m. £10 m with functional managers: use EBITDA

3 Find a market multiple

Ask your accountant for recent deals, scan Companies House filings, and read sector press. For many UK service firms:

• SDE commonly trades at two to four times
• EBITDA often trades at four to six times

Stay conservative for flat growth, stretch higher for strong recurring revenue.

4 Adjust for risk and upside

Add or subtract up to one multiple turn for each factor:

• Customer concentration
• Contracted recurring revenue
• Depth of management team
• Strong or weak cash flow seasonality

5 Check asset coverage

Add together net tangible assets plus surplus cash. This sets a floor below which a rational seller rarely goes.

6 Run sanity checks

• Payback: target buyer recoups cash within four to five years.
• Rule-of-thumb revenue multiple: many small firms change hands at fifty to eighty per cent of annual revenue.
• Debt service: profits after finance must cover any acquisition loan comfortably.

7 Package a three-band price guide

• Floor: asset value or low end of multiple range
• Mid: earnings times midpoint multiple
• Stretch: earnings times high end multiple after positive adjustments

8 Prepare proof for buyers

Gather the last three years of filed accounts, year-to-date management accounts, and a short note on adjustments made. Clean, organised numbers build trust and shorten negotiation.

Next step

Complete the three-band guide above, share only the mid figure as an asking anchor, and keep the floor and stretch numbers for your private negotiating range.