The Office for National Statistics recorded 352 mergers and acquisitions involving a change in majority share ownership in the first quarter of 2026, down from 495 in the previous quarter, on figures the ONS describes as provisional. Every deal in that count was worth at least £1 million, the floor at which the ONS starts counting. Most owner-managed businesses sold in Britain never appear in official data at all.
Here is the answer you came for. Owner-managed UK companies almost always sell on a multiple of sustainable earnings. A profitable business with adjusted earnings of £100,000 to £500,000 will usually attract offers between three and five times those earnings. Above roughly £1 million of adjusted earnings, with contracted revenue and a management team that runs the business without you, six to eight times is reachable. Those ranges come from brokered transactions rather than from published statistics: no Government body publishes valuation multiples by sector, and any figure claiming otherwise comes from a private dataset you cannot inspect.
The range is wide because the number is not really a calculation. It is a negotiating position, and almost all the work that moves it happens in the two years before the business goes to market, not in the valuation itself.
Turnover is the wrong anchor
Buyers price two things: the profit they expect to keep, and the risk that it stops. Turnover tells them only how big the operation is. Two businesses turning over £2 million, one making £80,000 with the owner working six days a week, the other making £360,000 under a general manager, are not variants of the same asset. They are different purchases at different prices.
Scale of the market matters here too. The Department for Business and Trade counted 5.7 million private sector businesses in the UK at the start of 2025, of which 38,435 were medium-sized and 8,335 large. The ONS separately records 2.73 million VAT or PAYE registered businesses as at March 2025. Most of the business population does not employ anyone and has nothing a trade buyer would want to buy. The pool of credible acquirers for any one company is smaller than owners expect, usually a few dozen firms rather than a market.
This produces the first counterintuitive point. A record turnover year can lower your price. If growth came from one large new customer, concentration has risen, the earnings look less durable, and a careful buyer will pay a lower multiple on a higher number and end up offering less. Growth helps when it is spread across customers you already had.
The methods used to convert earnings into a price are set out in full elsewhere on this site, and the wider landscape of valuation approaches sits above this page. This one deals only with the number itself.
Sustainable earnings and the add-backs that survive
Sustainable earnings means the profit a new owner could expect to make from the business as it stands, once your personal arrangements are stripped out. Most advisers start from EBITDA, which is earnings before interest, tax, depreciation and amortisation, then normalise it, meaning they adjust the figure to reflect what a third party would actually spend. The adjustments themselves are called add-backs.
Some add-backs survive due diligence. Others do not.
| Item | Usual treatment | Reason |
| Owner salary above the market rate for the job | Partly added back | Only the excess over the cost of a replacement manager disappears |
| Family member on the payroll with no operational role | Added back in full | The cost ends on completion |
| One-off legal costs on a settled dispute | Added back | Not recurring, but only with the file to prove it |
| Private motoring, travel and subscriptions run through the company | Added back | Traceable in the ledger and the director’s loan account |
| Rent paid to a landlord you also own | Normalised to market rent | A buyer inherits a market rent, not your arrangement |
| Repairs deferred to flatter the profit | Not added back | A real cost that has been postponed, not removed |
| Discretionary bonuses paid every year | Not added back | Recurring in practice, whatever the paperwork says |
An indefensible add-back costs more than it gains. When one item fails, the buyer stops testing items individually and starts discounting the schedule as a whole, or moves part of the price into an earn-out until the earnings prove themselves. A £15,000 add-back you cannot evidence can cost several times that in multiple.
Records are the constraint. Small companies currently file abridged or filleted accounts, so profit and margin stay off the public register, which means your own management accounts are the only evidence a buyer has. That changes: Companies House has confirmed that from April 2028 small companies and micro-entities must file a profit and loss account, with an option to keep it off public view. Until then, if your monthly accounts do not reconcile to your statutory accounts, you have no case to argue from.
What moves you up the range, and what moves you down
Customer concentration is the most common reason a good business receives a mediocre offer. One customer at a quarter of revenue invites a discount; one at half of revenue often changes the structure of the deal rather than the price, because the buyer will not fund the risk in cash. No Government source quantifies that discount, and any adviser who gives you a precise figure is guessing.
Owner dependence is close behind. The test is simple: what breaks if you are unreachable for six weeks. If the answer includes pricing, key accounts, technical decisions or supplier relationships, you are selling a job rather than a business, and the multiple reflects that.
Revenue quality decides most of the rest. Contracted or repeat revenue with reasonable notice periods sits at the top of the range. Project work won afresh each year sits near the bottom. Read your contracts before a buyer does: an assignment or change of control clause that lets a customer walk on a sale is a live problem, and it takes months to renegotiate.
Three further items move the number quietly. A lease with under three years unexpired, or a landlord with a veto over assignment, will delay completion and give the buyer a lever. Staff turnover in the year before sale reads as instability, particularly among anyone who holds a relationship or a licence. And financial records that arrive late, restated or unreconciled shift every uncertain judgement in the buyer’s favour, which is exactly where the price is decided. Most of this is fixable, and the preparation work worth doing before a sale is unglamorous and effective.
What the offer says and what reaches your bank account
Enterprise value is the value of the trading business itself, independent of how it happens to be financed. Equity value is what the shareholders receive. The gap between them is where sellers are most often surprised.
Almost all offers are made on a debt free, cash free basis. Borrowings come off: bank loans, hire purchase, invoice discounting, director’s loans, and often corporation tax and declared but unpaid dividends. Surplus cash is added back, though buyers argue about how much of your cash is genuinely surplus rather than working capital in disguise.
Then there is the working capital peg, a normal level of stock, debtors and creditors that you agree to leave in the business. If the actual position at completion falls short of the peg, the price falls with it. Completion accounts, prepared after the deal closes, settle the final figure. A seller who has quietly run down stock or pushed creditors in the final quarter will hand that gain straight back.
Deferred consideration is money paid later on fixed dates. An earn-out is money paid only if the business hits agreed targets after you have stopped controlling it. Both are common in owner-managed deals, and no official UK statistics record what share of SME consideration is deferred, so treat any national average you are shown with suspicion. In our experience the headline figure and the cash at completion can differ by a third or more, which is why the structure of an offer deserves more attention than its size.
The tax layer, and why waiting now costs more than it saves
Business Asset Disposal Relief reduces Capital Gains Tax on qualifying disposals. HMRC guidance confirms the rate is 18 per cent for disposals on or after 6 April 2026, against 14 per cent between 6 April 2025 and 5 April 2026 and 10 per cent before that. The lifetime limit stays at £1 million of qualifying gains, and the qualifying conditions must be met for at least two years up to the date of sale. Gains above the limit fall under the main Capital Gains Tax rates of 18 per cent and 24 per cent.
Work the arithmetic and the second counterintuitive point appears. On £1 million of gains for a higher rate taxpayer, the relief was worth £140,000 when the rate was 10 per cent. At 18 per cent it is worth £60,000. Tax planning still matters, but it now moves the outcome far less than a single year of drifting performance does. Owners who postpone a sale to wait for a clearer tax position frequently lose more in multiple than the relief was ever going to return.
HMRC offers a post transaction valuation check free of charge, requested on form CG34 and submitted at least three months before your filing date. Note what it is not. The service checks a valuation after a disposal has happened. HMRC will not tell you what your business is worth before you sell, and no official body will. None of this is tax advice; take it from an adviser who has seen your accounts.
What the market is doing to your number
Buyers borrow, so the cost of money sets a ceiling. The Bank of England’s Monetary Policy Committee held Bank Rate at 3.75 per cent on 29 July 2026 by a majority of six to three, with three members preferring an increase to 4 per cent. A buyer funding an acquisition at those rates has to service the debt from your earnings, which caps what any rational bidder can pay in cash regardless of what the business is worth to them.
Funding is available. The British Business Bank’s Small Business Finance Markets 2025/26 report, published in March 2026, found gross SME bank lending rose 9 per cent to £68bn in 2025, the second highest level in thirteen years, with challenger and specialist banks accounting for 60 per cent of it. Set that against the ONS deal count above and the picture is consistent: money exists, but buyers are selective and slower than they were.
A range, not a price
The number your accountant produces, the number a broker produces and the number a buyer produces will differ, and none of them is wrong. Each is a position supported by a set of assumptions about how durable your earnings are. The party with the better evidence sets the anchor, and in owner-managed deals that is usually the buyer, because the buyer has done this before and the seller has not.
This is why the two years before a sale decide the outcome. Nobody can argue you up a multiple in a meeting. They can only present what already exists, and by then the concentration, the contracts, the accounts and the management team are what they are.
What to do next week
Pull twelve months of management accounts and check they reconcile to your last filed accounts. Write down every add-back you intend to claim and, beside each one, the document that proves it; delete the ones with no document. Produce a revenue list by customer for the last three years and calculate what your largest account represents. Read your top five customer contracts and your lease for change of control and assignment clauses.
Then pick the one task that only you can do and give it to someone else this month. Two years of that is worth more than any negotiation.
When you want a considered view of the range rather than an online estimate, we will give you one, based on your accounts and on what businesses like yours have actually sold for. Start with a free business valuation, or read how the sale process works before you commit to anything.
Common questions
Can I value my business on turnover alone?
Only as a rough sanity check, and only in sectors where margins are tightly clustered, such as some retail and service franchises. Buyers price earnings and risk, so two businesses with identical turnover can be worth very different sums.
How long does a formal valuation take?
A considered valuation based on three years of accounts and a conversation about the business usually takes a week or two. Anything returned in minutes from a form is an average, not a valuation of your company.
Does HMRC decide what my business is worth?
No. HMRC’s post transaction valuation check, requested on form CG34, reviews a valuation after a disposal for Capital Gains Tax purposes, and it is free. It offers no view on price before a sale.
Should I sell before the tax rules change again?
Rate changes are announced in advance and the current Business Asset Disposal Relief rate of 18 per cent applies to disposals on or after 6 April 2026. Selling an underprepared business to meet a tax deadline usually costs more in price than the relief saves.
Why do brokers quote a range rather than a figure?
Because the final price depends on which buyer appears, how they fund the purchase and what due diligence finds. A single figure implies a certainty that does not exist until contracts are signed.
Author – John P. Gaskell
John is a senior member of the Blacks Brokers team with extensive experience leading successful national sales operations. He plays a central role in developing the team’s approach to client service, drawing on a deep belief that positivity, care and drive are the defining qualities of any great salesperson. John delivers comprehensive training across the organisation that instils a client-first ethos at every level, ensuring consistency of service throughout every transaction. His focus is always on achieving the best possible outcome for each client the business serves.
