How Much Is My Business Worth? UK Business Valuation Guide (2026)

How much is my business worth? Most UK small businesses I see go through change hands at 2x to 5x normalised EBITDA. That's the honest quick answer if you're starting a UK business valuation in 2026. But a café in Manchester and a SaaS company in London can both sit at £200k EBITDA and sell for completely different numbers, one at 2.5x, the other at 7x, because the underlying business quality, the sector, and the buyer pool aren't the same.

In my experience working on real UK deals every month, the gap between what sellers expect and what they actually receive is usually larger than people think. Honestly, valuation is part math, part conversation. You need the right method for your business type, a realistic read on 2026 sector benchmarks, and a candid audit of what's going to push your multiple up or pull it down.

This guide walks through all of that. You'll also find the NewOwner free business valuation calculator further down. It takes your sector, revenue, and EBITDA and gives you a low-mid-high range. It won't replace a professional valuation on a complex deal, but as a starting point for working out what you can realistically sell for, it's solid.

If you already have a number and you're ready to move, read our full guide to how to sell a business in the UK in 2026. This article is about getting the number right first. For technical standards, the ICAEW Corporate Finance Faculty publishes valuation guidance for UK SMEs, and RICS sets the standard for asset valuations involving property. The British Business Bank tracks quarterly SME deal multiples through its research releases too.

Before we get into method, here's a sector-level benchmark table. These are 2026 ranges based on UK transaction data from the mid-market and SME segments. Figures are EBITDA multiples unless noted.

A few caveats before you read this table:

• These are typical traded ranges, not guaranteed outcomes. Every sector has outliers.
• Micro businesses (EBITDA under £100k) usually trade at the bottom of these ranges, or below. A business doing £50k EBITDA isn't worth 4x just because the sector average is 4x.
• Premium multiples go to businesses with recurring revenue, low owner dependency, and clean books. The discount lands where the opposite is true.
• Deal size matters. A £200k EBITDA business might trade at 3x. The same sector at £2m EBITDA might fetch 6x.

Use this as a starting benchmark for UK business valuation, not a final answer.

These ranges are indicative. The real number for your business depends on deal size, risk profile, and how professionally the business is presented to market. I've seen businesses in the same row of this table sell six months apart at very different prices for exactly that reason.

There isn't one universal method. Which approach you use depends on your business type, deal size, and what buyers in your sector expect. Most buyers and their advisers run two or three methods side by side to triangulate a range. I do the same.

Valuation method comparison at a glance

Before we go through each approach, the table below shows when each method is used, what it's good at, and where it falls down. The honest answer to what your business is worth almost always uses two or three of these together.

Quick tip: If you're running the valuation yourself, use two methods. EBITDA multiple plus either SDE or comps works well for most SMEs. A single number from a single method is almost always wrong. A range from two methods is usually close enough to start negotiating.

1. EBITDA multiple (most common for UK SMEs)

EBITDA (earnings before interest, tax, depreciation, and amortisation) is the metric I see most often on UK SME deals. Buyers apply a multiple to maintainable EBITDA to arrive at enterprise value.

Take a 3-year average of normalised EBITDA (more on normalisation later), then multiply by the sector-appropriate number. A recruitment agency doing £400k normalised EBITDA at a 5x multiple is worth £2m.

This method suits most trading businesses with over £100k EBITDA. It's what most trade buyers, private equity houses, and management buyout teams will plug into their first offer.

One thing to watch. Buyers will pick over your EBITDA adjustments. Every add-back you claim has to be defensible. The £60k Range Rover lease you've been running through the business is unlikely to survive due diligence, and trying it usually costs you more in trust than you'd save on the multiple.

2. SDE — Seller's Discretionary Earnings (sub-£500k deals)

SDE adds back the owner's full salary, benefits, and perks on top of EBITDA. It's used for owner-operated businesses under £500k in annual profit, where the owner is the engine of the business.

SDE equals net profit plus owner salary plus personal expenses run through the business plus one-offs. A buyer uses SDE to see the true cash the business throws off before a new owner draws their salary. SDE multiples for UK small businesses tend to land at 2x to 3.5x.

If your business is genuinely owner-operated (you're the main salesperson, the main relationship holder, the person who decides things), SDE captures the reality better than EBITDA alone.

3. Asset-based valuation

This values the business on net assets: what's on the balance sheet, adjusted to fair market value. It's most relevant for asset-heavy businesses (manufacturing, plant hire, commercial property) and for businesses that aren't profitable.

Total the tangible assets (property, equipment, stock, debtors) at market value, subtract liabilities. The result is adjusted net asset value. For a struggling or loss-making business, this is the floor. It's roughly what a buyer could get by winding the business down and selling the parts.

Asset-based valuations ignore goodwill and future earnings, so they undervalue a profitable trading business. Don't let a buyer push an asset-based number on a business that clearly generates income. It's almost always a negotiating move.

4. Discounted cash flow (DCF)

DCF is theoretically the most rigorous method. You forecast the business's future cash flows, then discount them back to today using a required rate of return.

Build a 5-year cash flow forecast, assign a terminal value at year 5, apply a discount rate that reflects risk (15-25% for private SMEs), and sum the discounted values. The result is present value.

In practice, I find DCF tricky for SMEs because the output is only as good as the forecast, and forecasts for small private businesses are inherently shaky. It's usually used alongside other methods, or on larger deals where the financial modelling is more developed. If a buyer hands you a DCF-based offer that implies a low value, the discount rate they've used is the main lever, and it's negotiable.

5. Revenue multiple (SaaS and e-commerce)

Some high-growth sectors (mainly SaaS and direct-to-consumer e-commerce) use revenue multiples instead of EBITDA multiples, because the businesses may not be profitable yet but throw off strong recurring top-line revenue.

Multiply annual recurring revenue (ARR) by a sector multiple. UK SaaS businesses in 2026 see private deal multiples of 3x to 6x ARR for solid performers, with the best in class (strong NRR, sub-5% churn) hitting 8-10x. E-commerce businesses on revenue multiples trade at 1x to 2.5x revenue.

Worth noting. The SaaS multiple market has compressed since the 2021-2022 peak, partly because of AI disruption worries. A business that might have fetched 12x ARR in 2022 will probably get 5-7x today if growth has cooled. Sustainable growth rates and strong net revenue retention (NRR above 110%) are what drive upper-quartile multiples now.

6. Comparable transactions (comps)

Comps means looking at what similar businesses in your sector have actually sold for recently. It's the most market-grounded method because it tells you what buyers are paying, not what theory says they should pay.

Pull transaction data from M&A databases, broker deal feeds, or sector advisers. Find deals in your sector, revenue range, and geography. Apply the median multiple to your numbers. The hard part for UK SMEs is that private deal data is patchy and often not public.

This is one of the reasons NewOwner exists. Our marketplace generates real transaction data from UK business sales, so users can benchmark against actual deal multiples in their sector rather than theoretical ranges. When you list on NewOwner, your adviser can access comparable deal data to anchor your asking price to what the market is actually doing.

The fastest way to get a directional number is the NewOwner Valuation Calculator, a free tool built for UK business owners.

It asks for five inputs. Annual revenue is your last 12 months' turnover. Normalised EBITDA is your adjusted earnings (see the section below on normalisation). Sector is picked from a dropdown of UK business types. Growth rate is your last 3-year revenue CAGR. Location is England, Scotland, Wales, or Northern Ireland, which affects buyer demand.

The calculator gives back a low, mid, and high valuation band based on current UK market multiples. The low reflects a distressed or owner-dependent business. The mid is what a well-prepared business achieves. The high is premium conditions: recurring revenue, strong growth, low customer concentration.

You'll find the NewOwner Valuation Calculator on the sell your business page. It takes about three minutes to fill in and gives you a realistic range before you spend money on any advisers.

Two businesses in the same sector with the same EBITDA can attract very different multiples. Here's what actually moves the number, based on what I see on real deals.

Factors that push your multiple up

Recurring revenue is the single biggest premium driver. Contracts, subscriptions, retainers, maintenance agreements: anything that reduces buyer risk justifies a higher multiple. A business where 70%+ of revenue renews automatically is fundamentally less risky than one starting from zero each year.

Low owner dependency matters enormously. If buyers think the business walks out the door when you do, they'll either discount the multiple or insist on a long earnout. A business with a real management team, documented processes, and clients who relate to the brand rather than to you personally commands a premium.

Customer diversification reduces concentration risk. No single customer should be more than 10-15% of revenue. Buyers will always ask what happens if your biggest customer leaves. If the honest answer is "it hurts, but the business survives," that's a premium signal.

Clean financial records reduce friction in due diligence and reduce buyer doubt. Audited accounts, tidy management accounts, a credible P&L, all of it helps. Messy books slow deals and chip the price.

Sector tailwinds push multiples up. If your industry has structural growth drivers like an ageing population, digital migration, or regulatory requirements, buyers pay more because your future earnings look safer.

Factors that discount your multiple

• Revenue declining year on year, even slightly
• Customer concentration above 25% with one client
• Owner is the primary salesperson, relationship holder, or technical expert
• Owner-mixed or unclean financial accounts
• Regulatory or legal exposure (outstanding HMRC enquiries, employment tribunal risk)
• Lease nearing expiry with no renewal certainty
• Critical staff not under contract or at risk of leaving
• Sector headwinds (declining categories, disruption risk)

Most small UK businesses I look at have at least two or three of these. That's normal. The goal isn't perfection. It's knowing where your weak spots are so you can address them before going to market, or at least price them in when you don't have time to fix them.

Heads up: Sellers routinely add 20-40% to their own number for emotional value. Buyers do the opposite. If your self-assessed valuation feels high, strip out any line you couldn't justify to a sceptical accountant before you take it to market.

This is the step most sellers skip, and it's the one valuation adjustment that costs them the most money when they ignore it.

Normalised EBITDA removes one-off items and owner-specific costs to show what the business would earn under a typical new owner. It's the number buyers use as the basis for their multiple, so getting it right directly affects your valuation.

Common add-backs (items that increase your EBITDA)

Owner salary above market rate is a common add-back. If you pay yourself £120k but a market-rate MD would cost £80k, you can add back £40k.

Personal expenses through the business: phone contracts, a car lease used privately, home office costs that wouldn't survive under a new owner.

One-off costs: redundancy payments, legal fees from a one-time dispute, the cost of moving premises.

Excess depreciation or amortisation applies where D&A overstates actual cash spend on maintaining assets.

Common deductions (items that reduce your EBITDA)

Owner salary below market rate is a deduction. If you've been paying yourself £30k in a business where a replacement would cost £80k, real earnings are lower. Buyers will make this adjustment whether you do or not.

Required capex is the other big one. Heavy ongoing investment needed to keep the business running, but not yet reflected in current accounts, reduces what a buyer will pay.

For a detailed walkthrough of normalisation with worked examples, see our normalised EBITDA guide for UK business owners. Getting this right before you go to market is probably the highest-return preparation step you can do.

The ICAEW's business valuation guidance is a useful frame for how professional valuers approach earnings normalisation.

A proper UK business valuation isn't just about applying global benchmarks. There are specific UK tax, regulatory, and market factors in 2026 that affect what your business is actually worth in your pocket.

Business Asset Disposal Relief

How much you net after tax matters as much as the headline price. Business Asset Disposal Relief (BADR) lets qualifying UK sellers pay 18% CGT on gains up to £1m, versus the 24% standard rate. On a £1m gain, that's £60,000 in your pocket. Real money.

The rate has risen from 10% to 18% over the past two years, so the after-tax advantage is materially smaller than it used to be, but BADR is still worth structuring your exit around if you qualify. If you're not sure whether you do, get advice before you complete any transaction.

For a full breakdown including eligibility, worked examples, and how to claim, read our Business Asset Disposal Relief guide for 2026.

R&D tax credits and creative industry reliefs

If your business has claimed R&D tax credits, creative industry reliefs, or similar HMRC incentives, buyers will want to understand the history and sustainability of those claims. Well-documented, legitimate claims can be a positive. They signal an innovative business and represent real cash that's been recovered. Aggressive or poorly documented claims are a due diligence risk that can depress the price or trigger price chips. I've seen deals slowed for weeks by exactly this.

Post-Brexit trade-exposed sectors

For UK businesses with large EU revenue, EU supply chains, or import-export exposure, valuation is still affected by post-Brexit operational complexity. Buyers with UK-only focus tend to discount trade-exposed businesses differently from those with international appetite. Specialist sector knowledge matters here. A PE house with EU portfolio companies views cross-border complexity very differently from a UK trade buyer with no EU exposure.

The 2026 deal environment

The UK M&A mid-market saw average EBITDA multiples of 5.3x in 2025 according to the Dealsuite M&A Monitor. Quality businesses are still selling. Interest rates have moderated since 2023, which has improved buyer financing costs and widened the pool of financial buyers. For sellers, this is a better environment than 2023-24, but buyers are still disciplined on quality. The gap between well-prepared and poorly-prepared businesses has widened, not narrowed. That's the part most sellers underestimate.

The British Business Bank's guide to valuing a business is a useful complementary read for the UK context.

Worth knowing: After BADR and CGT, a £1m sale at 18% leaves roughly £820k in your pocket. A £1m sale at 24% leaves £760k. When you're working out what your business is worth, run the after-tax number alongside the headline. That's the figure that matters for whatever comes next.

The NewOwner Valuation Calculator and this guide will get you a solid working range for a DIY valuation. But there are situations where a formal, independent valuation from a professional is the right call.

When you should pay for a professional valuation

Before a large transaction. The cost of a professional valuation (£1,500 to £10,000 depending on complexity) is a small slice of what better price negotiation can return on a business worth more than £500k.

Shareholder disputes need an independent valuation. If partners disagree on value during a buyout or divorce, an independent RICS-qualified valuer or Chartered Accountant gives you an objective figure that can survive legal scrutiny.

Succession planning needs a formal valuation. Inheritance tax planning needs a number HMRC will accept. Informal estimates can be challenged. A defensible professional valuation matters.

Buy-to-invest decisions benefit from an independent view too. If you're thinking about selling a minority stake to a private equity investor or angel, an independent valuation gives you a floor for the negotiation.

EIS or SEIS fundraising sometimes needs third-party valuation support for HMRC compliance.

What professional valuers actually do

A qualified business valuer, usually a Chartered Accountant (ICAEW or ICAS) or RICS-qualified firm, will apply multiple methods, interview management, review 3-5 years of accounts, assess sector conditions, and produce a written report with a supported valuation range. It's not a quick online tool. It's a considered professional opinion that can take a challenge.

Costs vary. A sole trader with simple accounts might pay £1,500. A complex limited company with multiple subsidiaries and real goodwill could cost £8,000-10,000. For most SMEs, budget £2,500-5,000.

If you're not at that stage yet and want to understand how the sales process works before committing to anything, our guide to how to sell a business in the UK in 2026 covers the full process from valuation through to completion.

DIY vs professional: my honest take

For most owners in the early stages of thinking about a sale, a self-calculated range is fine as a starting point. Do the normalised EBITDA calculation, apply a realistic sector multiple, and you'll have a working number. What you shouldn't do is use that number as a fixed anchor in negotiations without independent verification. Buyers will have done their own analysis, and if your number is materially off, it creates friction that kills deals. I've watched it happen. NewOwner connects sellers with accredited advisers who can provide a professional view alongside a market-ready listing.

List your business on NewOwner and connect with thousands of qualified buyers across the UK. Our marketplace gives you full control. You set the terms, respond to offers, and sell without paying commission to a broker.