Selling your business is one of the most important financial decisions you’ll ever make. For most owners, it represents the return on years of investment and effort.

Almost without exception, the first question we hear is:

“What is my business worth?”

It’s a simple question, but the answer is never straightforward. Business value isn’t defined by a single formula. It is shaped by multiple factors, some you can influence and some you cannot.

We’ve guided owners across industries through this process. We know that understanding your valuation, and improving it before you sell, can be the difference between an acceptable offer and an exceptional deal.

Why valuations matter

Your business is likely your largest financial asset. Knowing its market value should be part of long-term planning, not just a step before sale.

An accurate valuation can help you:

• Set personal financial goals: retirement, a career change, or your next investment.
• Shape your exit strategy: some businesses need a year to prepare for sale, others three to five years to optimise value.
• Plan for succession: passing the business on to family, management, or investors is easier with a clear understanding of worth.
• Raise finance: lenders and investors use valuation data to make funding decisions.

We see both risks. Overestimating value can stall deals. Underestimating it risks leaving hundreds of thousands, even millions, on the table.

Core valuation methods

No two valuations are identical, but most are grounded in one or more of these approaches.

Earnings multiples (EBITDA-based)

We often use this method for established, profitable businesses.

• We start with EBITDA (earnings before interest, tax, depreciation and amortisation).
• We apply a sector multiple based on norms, stability and perceived risk.

Example:
EBITDA = £1 million. If the typical market multiple is 5, the baseline valuation is £5 million.

Multiples rise or fall depending on:

• Growth trajectory
• Quality of earnings
• Customer diversity
• Sector demand

In high-growth sectors, multiples can exceed 8–10. In lower-growth or higher-risk sectors, they may fall to 2–3.

Asset-based valuation

This works best for asset-heavy companies such as manufacturing, property or logistics.

• We calculate the value of tangible and intangible assets, then subtract liabilities.
• It is effective where physical assets underpin value.

Example:
Net assets total £3 million = baseline valuation.
But it undervalues service-based or IP-driven companies, where most worth lies in people, brand or proprietary technology.

Market comparisons

We also look at market comparables: recent sale prices of similar businesses, adjusted for size, performance and growth prospects.

• Strong where there is plenty of data.
• Less effective in niche sectors with few comparable sales.

Why two similar businesses sell for very different prices

On paper, two businesses may look identical: same revenue, same profit, same sector. Yet one sells for 30% more.

We see this difference driven by perceived risk and growth potential.

Key differentiators include:

• Recurring vs one-off revenue. Contracted recurring income is most attractive.
• Customer concentration. Reliance on one or two major clients reduces value.
• Brand reputation. Trusted, established brands command a premium.
• Management strength. A capable team reduces dependency on the owner.
• Barriers to entry. Patents, exclusive agreements or strong IP protect value.
• Scalability. Buyers pay more where future growth is achievable.

The role of market conditions

Valuation is never just about your business. It is also about the market you are selling into.

• Economic climate: high interest rates, recession fears or political uncertainty can suppress valuations.
• Sector trends: a growing industry lifts multiples; a declining one drags them down.
• Buyer demand: more competition for assets pushes prices up.

We regularly advise clients to adjust timing based on market forces. The same business can attract very different offers depending on conditions.

The preparation premium

Preparation is where owners can add the most value before going to market. Businesses taken to sale in a structured, well-prepared way often achieve 20–30% higher valuations.

When we prepare clients, we focus on:

• Financial clarity: clean, accurate accounts and reporting.
• Risk management: legal, compliance and contractual issues resolved early.
• Operational efficiency: documented processes and capable teams.
• Growth story: a credible plan backed by evidence.

Case example (anonymised):
We worked with a SaaS client 12 months before sale. We identified weaknesses in customer diversification and systems documentation. By the time we went to market, those risks had been addressed and the business sold for 28% above the initial valuation estimate.

Common valuation myths

• “I know what my business is worth — I’ve seen similar ones online.”
  Asking prices are not sale prices. Many listed businesses never transact at advertised values.
• “The buyer will see the potential.”
  Buyers pay for what exists today. Future potential must be credible and evidenced.
• “A big brand will want to buy me for my name alone.”
  Brand contributes, but fundamentals drive value. Without them, brand alone rarely secures a premium.

Market value vs owner’s value

Owners naturally place a high personal value on what they have built. But buyers look at:

• Return on investment
• Risk exposure
• Integration potential

Bridging this gap — between what you feel your business is worth and what buyers will pay — is where we add the most value.

How we help maximise value

Our role goes beyond providing a number. We:

• Analyse your business in detail using sector benchmarks.
• Identify ways to improve value before going to market.
• Advise on timing to align with favourable conditions.
• Run competitive sale processes to generate buyer tension.
• Negotiate terms that protect both your financial outcome and your legacy.

Selling a business is a one-shot opportunity. With the right preparation and positioning, we can help you secure the best possible outcome.

What to do next

To arrange a confidential, no-obligation valuation review, get in touch with us today.