There is no single right figure, and anyone who gives you one without seeing your accounts is guessing. What you can get is a range, produced by a method – and which method applies depends on what your business actually is. A profitable trading company is valued on a multiple of its earnings. Something capital-heavy, or winding down, is valued on its assets. A young business whose value is its growth is valued on revenue. Pick the wrong one and the number will be wrong by more than any haggling will recover.

The work is working out which method is yours, then getting to a profit figure a buyer will accept.

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Which of the three methods is yours

Start with what a buyer is really buying: your profits, your assets, or your growth. That one answer picks the method, and the rest follows from it.

Two things follow from that table.

The asset method sets a floor rather than a price. What is in the business is the book value of the assets, not what somebody would pay to own them, and for most trading companies the earnings figure comes out higher. If it does not – if your business earns less than its assets are worth – that is worth knowing before you market it, because a buyer will spot it too.

And you will meet discounted cash flow, which values a business on its forecast cash, discounted back to today. It is the right tool for a long project with contracted income. On an owner-managed company it rarely survives contact with the forecast, because the answer moves enormously on assumptions nobody can defend. Where there is no open market at all, as in a management buyout, it sometimes has to be used anyway.

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The figure people argue about is the profit, not the multiple

Owners spend their time arguing about the multiple. Buyers spend theirs arguing about the profit it gets applied to, because that is where the money is.

The starting point is earnings before interest, tax, depreciation, and amortisation. Then come the adjustments, and this is the real negotiation. The principle is simple: strip out everything that happened because you own the business, and put back everything a new owner would have to pay for.

Take a company turning over £740,000 with an operating profit of £96,000. These figures are an illustration, not a typical business, but the shape of the argument holds on most jobs.

Add back £14,000 of depreciation and the earnings figure is £110,000. Then four adjustments, all of which a buyer will want to see evidence for:

• The director pays themselves £93,000 for a job a hired manager would do for £65,000. The extra £28,000 is a return on owning the business, not a cost of running it, so it comes back.
• An employment tribunal and its legal fees cost £16,000 in 2025 and will not recur. Back it comes.
• A car runs through the business for a family member who does not work in it. That is £5,000.
• And one that goes the other way. The owner's partner does the bookkeeping and the invoicing unpaid. A buyer would have to employ someone, so £18,000 comes off.

That last one matters more than the other three, because it is the adjustment sellers forget and buyers always find. Anything the business gets for free because of who owns it has a cost to whoever buys it.

The adjusted figure is £141,000, against a reported operating profit of £96,000. Nothing about the trading changed. Be ready to evidence every line of it, because each one you cannot support is a line the buyer takes back out.

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What a range of multiples does to that number

Apply the published UK multiples to that £141,000 and you do not get a price. You get a band.

At 4.5 times – the median earnings multiple in the UK200Group's SME Valuation Index for November 2025, built from completed transactions reported by its member accountants – the business is worth about £635,000. At 5.4 times, the UK and Ireland average that Dealsuite reported in its mergers and acquisitions monitor for February 2026, it is about £761,000. Stretch across the range Dealsuite publishes for different sizes of company, 3.3 to 8.4 times, and the same company is worth anywhere from £465,000 to £1,184,000.

That is a spread of £719,000 on a business making £141,000 – about five times the profit the whole calculation started from. The spread is not a flaw in the arithmetic. It is the answer.

Two things to know before you take any of those numbers to a buyer.

The first is that these are enterprise values. What you receive is the enterprise value less the company's net debt. If that business carries £60,000 of outstanding finance against £25,000 of cash, £35,000 comes off, so the 5.4 times figure is about £726,000 for your shares rather than £761,000. Ask which number anyone quoting you a multiple is talking about.

The second is what happens when the two of you cannot agree where in the band to land. The usual answer is to make part of the price conditional on how the business performs after completion. That is an earn-out, and it is the point where valuing a business turns into funding one. How it is structured, secured, and taxed is covered in how the seller lends part of the price.

Dealsuite puts it plainly in its own report: 'A multiple, on its own, does not constitute a complete valuation methodology, but it serves as a useful cross-check.' Treat any multiple as a sense check on a figure you reached another way.

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Why your multiple is lower than the one you read online

Size moves the multiple more than sector does, and almost every published figure describes a company bigger than yours.

Dealsuite surveys 435 advisory firms about companies with turnover between £1m and £200m. Within that, it found a gap of 5.1 turns between a company making £200,000 of adjusted earnings, at 3.3 times, and one making £10m, at 8.4 times. Same market, same half-year, two and a half times the multiple, on size alone. A bigger company is less dependent on one person and one handful of customers, and its profits are steadier, so a buyer pays more for each pound of them.

Then there is the part nobody quoting you a multiple will mention. Dealsuite declines to publish a multiple at all for companies earning less than £200,000, and says why: 'For small companies, the risk premium is very case and company specific', small-company earnings are 'often unstable' and therefore 'not a good unit of measurement on which to base the valuation', and the value 'is largely dependent on the (future) potential of the company'.

So if your business makes less than £200,000 of adjusted profit, the organisation that publishes UK small-company multiples twice a year has looked at your size and concluded the number would mislead you. That is worth more than any figure it could have printed.

It is also worth knowing which way the published figures lean. The Institute of Chartered Accountants in England and Wales warns that 'some indexes exclude companies that are loss-making at an EBITDA level, which leads to the average sale price being higher than it would be if all transactions were included'. And the index it names as a main UK source, BDO's Private Company Price Index, has been available only to clients and prospective clients of the firm since its 2025 edition, so you cannot check it.

None of this comes from an official source, because there is no official source. The Office for National Statistics counts only mergers and acquisitions worth £1m or more, and publishes deal counts and values rather than multiples. Every range in circulation comes from a private firm describing its own deal flow.

How far apart can two serious valuations of the same company be? In Foulser and Foulser v HMRC in 2015, the taxpayers' expert valued a 51% shareholding at £6,000,000. HMRC's expert valued the same shareholding at £20,638,000.

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If your business has no significant assets

If you run a service business, the asset method gives you almost nothing, and that is not a problem with your business. Nearly all of its value is goodwill.

HMRC's own guidance quotes a judgment from 1901 that has never been improved on: goodwill is 'the attractive force which brings in custom'. Your customers come back, your name opens doors, your team knows how the work is done. None of it is on the balance sheet and all of it is worth paying for.

But there is a line through it that decides a great deal of your valuation. HMRC puts it like this: in a business that relies on the skill and personality of its owner, 'it is likely that the goodwill will be personal to the proprietor' – and where that is so, 'any profits attributable to the reputation, personal skill or ability of the proprietor must be excluded'. If the business could not continue without you, much of what you think you are selling does not transfer.

The practical consequence is the most useful thing on this page for a service business. Every step you take to make the business work without you – a second person who can win the work, documented processes, customer relationships that sit with the company rather than with you, a management layer – converts personal goodwill into business goodwill. That is why getting the business ready to sell is worth starting years before you sell. HMRC's own checklist for valuing goodwill asks about succession arrangements and how the owner's personal goodwill has been reflected in the figure, so this is not a broker's opinion.

One more thing, since it is often the hope behind an optimistic number. A buyer who can fold your customers into their own operation may pay extra for that, but HMRC's position is that 'there should be no expectation of a synergy-based value on an open market value basis unless synergy in a particular market is commonplace'. Do not build your expectations on it.

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What 'market value' actually means

For a commercial sale, market value is whatever a willing buyer and a willing seller agree, and no UK law or regulator governs how you reach it. For tax, there is a statutory test, and it is worth reading because it shows you what a valuation is supposed to be.

The Taxation of Chargeable Gains Act 1992 defines market value as 'the price which those assets might reasonably be expected to fetch on a sale in the open market'. Not what you would like. Not what it is worth to you. What it would fetch.

For shares in a private company the Act adds something revealing. It assumes that the buyer has 'all the information which a prudent prospective purchaser of the asset might reasonably require'. The hypothetical buyer in the statute has seen everything.

Your real buyer has not, and that gap costs money. What a buyer cannot verify, they discount, or they hold back in a price adjustment until they can. Three years of clean, consistent accounts and a straight answer to every awkward question are worth real money, because they close the distance between the informed buyer the law imagines and the cautious one across the table.

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Can HMRC tell you what your business is worth?

No. HMRC will check a valuation you have already made, free of charge, but only after you have sold, and it will not give you a figure in advance.

The service is called a post-transaction valuation check, on form CG34, and it is genuinely useful at the right moment. You have sold, you need a market value for your capital gains calculation, and you would rather not find out in two years that HMRC disagrees. Send form CG34 after the disposal and before you file, and HMRC's Shares and Assets Valuation team will either agree your figure or propose a different one to negotiate.

Three details decide whether it works for you. It must reach HMRC at least three months before your filing date, or it will not be processed. You still have to file on time whether or not a valuation has been agreed. And a share or goodwill valuation needs full accounts for the three years up to the valuation date, which is the same evidence a buyer will ask for. HMRC aims to reach an agreed figure within four weeks of having everything it needs.

What it cannot do is tell you what to ask for. You cannot approach the team for a valuation of unquoted shares, and nothing it agrees is a view on what a buyer should pay. It is a tax check, not a price.

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What a buyer can already see about you

The market method says to look at comparable companies. In practice, for a company your size, there is very little to look at.

You can search any UK company's filings free on Companies House, and a buyer will certainly search yours. The service carries its own warning worth repeating: 'Companies House does not check the accuracy of the information filed.'

What you will find is thinner than you would expect. A small company may choose not to send its profit and loss account at all, and a micro-entity may file only a balance sheet. So for most businesses the size of yours, the public record shows what the company owns and owes, and says nothing about what it earns.

That changes from April 2028, when every company must file a profit and loss account – but less than the headlines suggest, because small companies and micro-entities will be able to opt out of publishing it on the register. Profits are likely to stay private for most owner-managed comparables.

So the comparables in a valuation report are either much larger companies or deals someone has private knowledge of. If you are handed a market-based valuation, ask which companies it compared you with, and how the person knew what they sold for.

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What you keep after tax

The figure that matters is what reaches you, and the tax treatment can move it by more than a turn of the multiple.

Selling the shares in your company is a capital gain. Business Asset Disposal Relief charges qualifying gains at 18% for disposals on or after 6 April 2026, up to a £1m lifetime limit. If you read 10% or 14% anywhere, both are out of date, and the rate has risen twice in two years. The £1m is a lifetime allowance rather than an annual one, so it is spent once across everything you ever sell.

The conditions bite in advance, because they look back two years from the sale. They are straightforward to arrange three years out and impossible to fix the week before completion, which is why this is the part of a sale where an accountant earns their fee several times over. Involve one before you agree heads of terms.

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Getting to a figure a buyer will accept

Everything above is work you can do yourself, and you should, because you will understand your own adjustments better than anyone. What you cannot do yourself is be the person a buyer believes.

That is the gap manda by iwoca exists to close. It is our marketplace for buying and selling small businesses, for companies typically valued below £10m – the size band where, as this page has set out, no published multiple exists. For a seller it turns your own figures into verified financial reports and realistic valuation guardrails before you meet any buyer, matches you only with buyers who have been checked for the means to proceed, and arranges the acquisition finance as part of the process, so an offer is credible when it arrives. Sellers pay a success fee only, on completion. On the other side of the same deal, what a buyer can raise is usually what decides whether your price is achievable, and some owners who run these numbers decide they would rather be buying one instead.

Whoever does the work, there is no published range for what a valuation costs in the UK, because every firm quoting one is quoting its own price list. What drives it is the size of the company, how clean the accounts are, and whether the figure has to stand up to HMRC or a court rather than to a buyer. Ask what the fee covers, whether anyone will defend the number if it is challenged, and how long it is expected to hold. A valuation is a view on a date, not a fact about your business, and the figure moves as your accounts do.

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