When Should You Value Your Business?

Value your business before the event that forces the question, not after it arrives. Work out which trigger you are facing, count back the lead time it needs, and start then. A sale needs a year or more. A share option grant needs three months. A death gives no notice at all.

Most owners commission their first valuation because something has already happened: a buyer has telephoned, an accountant has flagged a deadline, a co-shareholder has said they want out. The argument of this article is that this order costs owners money. A valuation produced under deadline, under an offer or under dispute is negotiated from a weaker position than one produced calmly in advance. The mechanics of arriving at a figure sit outside this article and are set out in the wider guide to how a business is valued in the UK.

Which trigger are you facing, and how much notice does it give

Separate the events that force a valuation from the ones that merely invite it. A death, a divorce, a share option grant and a funded offer all force one, and they give the least warning. Retirement plans, a curiosity about your own net worth and a competitor selling up all invite one, and they give the most. The test is whether anybody other than you sets the deadline.

If the deadline is somebody else’s, find out what it actually is before you do anything else, because several of them are published. HM Revenue and Customs guidance on agreeing a share scheme valuation confirms that a valuation agreed for Enterprise Management Incentive purposes is valid for 90 days from the date of agreement, and the options must be granted inside that window or the process begins again.

Succession gives longer notice but demands more of it, because the qualifying conditions have to be in place well before anyone transacts. Business Asset Disposal Relief is a reduced rate of Capital Gains Tax on qualifying disposals of a business or of shares in a personal company, and the GOV.UK guidance on Business Asset Disposal Relief sets conditions that must have been met for at least two years up to the date of sale.

Two triggers set a valuation date you cannot choose. Where a full account of an estate is required, the GOV.UK guidance on valuing an estate sets a reporting deadline of twelve months from the date of death, with the business valued as at that day. On relationship breakdown, the GOV.UK guidance on money and property when a relationship ends explains that a transfer made after the tax year of separation requires a valuation of the asset on the date of transfer.

Shareholder protection insurance is the trigger owners forget, because nothing happens on the day it lapses into inadequacy. Cover bought against a figure from four years ago will not fund the purchase of a deceased shareholder’s holding today, and the surviving shareholders discover the shortfall at the worst possible moment. The lead times below come from Blacks Brokers transaction experience rather than published data, and each one moves with the circumstances of the business.

Trigger	When to start the valuation	What goes wrong when the trigger lands first
Planned sale of the business	Start twelve to twenty-four months before you intend to go to market.	Owner dependency and customer concentration need whole trading periods to correct, and cannot be fixed once buyers are reading the accounts.
Bringing a shareholder in or buying one out	Start three to six months before the conversation becomes a negotiation.	The first figure proposed becomes the anchor, and you argue against it rather than from a position of your own.
Management buyout	Start six to twelve months before approaching the management team.	Managers cannot raise funding against an untested number, and you negotiate with people who already know every weakness in the business.
Raising finance or funding an acquisition	Start alongside the funding conversation, before terms are indicated.	Lenders and investors price on their own assessment, and an owner with no reference point accepts a valuation set entirely by the other side.
Granting share options to staff	Start at least three months before the intended grant date.	An agreed Enterprise Management Incentive valuation lapses after 90 days, so a delayed grant means beginning again.
Gifting or transferring shares within a family	Start at least two years before the intended transfer.	Reliefs that depend on qualifying ownership periods cannot be created retrospectively, and the transfer value is fixed on the day it happens.
Death and probate	Prepare a standing valuation while the owner can still explain the business.	Executors value an unfamiliar business to a reporting deadline, with nobody left to explain the accounts or the customer relationships.
Divorce or shareholder dispute	Start as soon as separation or disagreement is foreseeable, not once proceedings begin.	Each side commissions its own expert, the figures diverge, and the cost of closing the gap falls on both parties.

Why the purpose behind a figure changes the figure

Before you accept any number, ask what basis it was prepared on and what it was prepared for. Tax valuations rest on open market value, meaning the price a willing buyer would pay a willing seller with neither under compulsion. That is a hypothetical transaction, and in Blacks Brokers experience it behaves differently from a competitive process, which introduces buyers with a specific commercial reason to want one particular business.

The basis is not a technicality. HM Revenue and Customs guidance on Business Relief for Inheritance Tax requires executors to use market value, and for deaths on or after 6 April 2026 it caps 100 per cent relief at £2.5 million of combined qualifying business and agricultural property, with relief above that restricted to 50 per cent. A figure prepared for that purpose is answering a different question from one prepared to set an asking price.

Two terms will appear in whatever you are given. Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, restated to strip out one-off costs and to replace your drawings with a market-rate salary. Goodwill is the amount a buyer pays above the net value of the identifiable assets. Which method produces the number, and whether more than one should be reconciled, is treated in the guide to UK business valuation methods.

If a buyer has already approached you

Do not give a number. Thank them, ask them to set out in writing what they are proposing and on what basis, and put a confidentiality agreement in place before you disclose anything that is not already on the public record. Whoever names the first figure sets the ceiling, and the owner who invents one on the telephone spends the next six months negotiating downward from a number they cannot defend.

The approach is rarely as spontaneous as it feels. On our mandates, the buyer has usually read the filed accounts at Companies House, mapped the operators in the sector, identified which ones are likely to have an ageing owner, and contacted several of them in the same month. The call that arrives as a compliment is the output of a process, and you are the only person in the conversation who has not prepared for it.

Establish four things before you engage. Who the buyer actually is, whether the money is already available or still to be raised, whether they are proposing a share sale or an asset sale, and what exactly they think they are buying. A share sale transfers the company itself with its history and liabilities attached. An asset sale transfers selected assets and goodwill, leaving the company behind. A price quoted without saying which one is on the table tells you almost nothing about what you would receive.

Structure matters as much as the headline. Heads of terms is the non-binding document setting out price, structure and usually a period of exclusivity before lawyers begin drafting. Deferred consideration is part of the price paid later, and an earn-out makes part of it conditional on the business hitting agreed targets after completion. Warranties and indemnities are your contractual assurances about the state of the business, with promises to make good if they prove wrong. A strong headline attached to a long earn-out and broad warranties is often worth less than a lower figure paid in cash.

Deals stall in due diligence more often than at the offer stage, and the causes repeat. Management figures that will not reconcile to the filed accounts. A lease running into its final years, or a landlord whose consent to assignment takes longer than anyone allowed for. Revenue that turns out to belong to the owner personally rather than to the business. Owner dependency is the most reliable suppressor of a multiple we see, and buyers answer it by discounting, by deferring more of the price, or by leaving.

There is also a reason not to negotiate alone that has nothing to do with price. A direct approach from a competitor is an information-gathering exercise as well as an offer, and what you disclose in an unprotected conversation does not come back. Where an approach hardens into a real intention to sell, selling a business through a broker works differently from responding to a single interested party, because a controlled process protects both the information and the competitive tension.

What to have ready before a valuation starts

Gather the material first, because the quality of the figure depends almost entirely on it. Three years of filed accounts and management accounts to the most recent month end. Revenue split by customer for each of those three years, which is what shows concentration. A schedule of add-backs, meaning the costs you say would not recur under new ownership, with evidence for each. The lease, with expiry date, break dates and rent review dates. A staff list showing roles, length of service and who holds which customer relationships. Key contracts with their notice periods. Any freehold property, which is valued separately.

Then interrogate whoever produces the number. Ask what basis they used and why. Ask which of your add-backs they accepted and which they rejected, because a buyer will reject the same ones. Ask what multiple they applied and what evidence supports it. Ask the most useful question last: what would move this figure up, and how long would each change take to become credible to a buyer.

This is also the honest limit of an article. Nobody can tell you what your business is worth from a page on the internet, and the tax position depends on circumstances that need advice from someone who has seen your accounts. What an article can do is tell you what to ask for and what a weak answer looks like.

How quickly your valuation goes out of date

Your figure is accurate on the day it is prepared and drifts from that day. Five changes account for most of the drift: a new set of filed accounts, a contract won or lost that shifts customer concentration, a lease moving into its final years, a key person leaving, and a change in the cost of buyer finance.

New financial information is the most predictable, and the tax system treats it as significant in its own right. HM Revenue and Customs lists the publication of new financial information, such as annual accounts, among the significant events that end the validity of a share valuation agreed for a Share Incentive Plan.

The filing calendar sets the rhythm. Under GOV.UK guidance on accounts for private limited companies, a private company has nine months from the end of its financial year to file annual accounts with Companies House. A valuation resting on the last filed set can be describing a trading position that ended well over a year ago, which is exactly why buyers ask for management accounts to the most recent month end before committing to anything.

The cost of finance moves without reference to you and changes what a leveraged buyer can pay. The Bank of England reduced Bank Rate from 5.25 per cent in August 2024 to 3.75 per cent in December 2025, and it remained at that level at the Monetary Policy Committee decision of 30 July 2026. A valuation prepared at one end of that movement was describing a different buyer pool from one prepared at the other.

If you think valuing early is money wasted

Part of that objection is correct, and it deserves a straight answer. A valuation is an opinion, not a price. The only figure that settles anything is the one a funded buyer will pay and a lender will support. An early valuation costs money, will change, and can leave you anchored to an expectation the market has since moved past.

What the objection misses is the alternative. The choice is not between an early valuation and no number. It is between your number and the buyer’s number, produced by someone who has prepared and delivered to someone who has not. The early valuation also does something the late one cannot: it tells you which characteristics are holding the figure down while there is still time to change them, and most of those changes need twelve to twenty-four months of trading before a buyer will believe them.

The assumption that a sale will always be available is worth testing too. Office for National Statistics business demography data for 2024 records 280,000 UK business deaths, a rate of 9.8 per cent of the active business stock and the lowest since 2016. Those figures count businesses that ceased trading, not businesses that changed hands. Closure is an ordinary ending for a UK business, and it is more likely for owners who never established what theirs was worth or what would have made it saleable.

How often to revisit the figure when nothing is planned

Refresh the number each year when the accounts are finalised, and commission a fuller reassessment every two to three years. The annual refresh is not arbitrary. The accounts are the unit in which your own record updates, buyers price from those accounts, and any figure older than the most recent set will be challenged by the first informed buyer who reads them.

The fuller reassessment exists because the things that move a multiple move more slowly than profit does. Management depth, customer concentration, lease length and the proportion of revenue under contract change across years rather than quarters, and their effect only becomes visible when the comparison period is long enough to show it. One year of figures shows trading. Three years show a direction.

Outside that cadence, revalue when a trigger becomes foreseeable rather than when it arrives. A shareholder mentioning retirement, a key customer going out to tender, a lease entering its final three years and an approach from a competitor are all advance notice. None of them obliges you to do anything, and all of them are easier to answer with a current figure than without one.

What to do next

The right time to value a business is before the event that will force the question. Look at the table above, find the trigger closest to your situation, count back the lead time, and compare that date with today. If the date has already passed, that is worth knowing now rather than in the middle of a negotiation.

If a reference point and a clear view of what is driving it would be useful, Blacks Brokers offers a confidential business valuation at no cost, with no obligation to take anything further.

By John P. Gaskell, senior sales team, Blacks Brokers.

John P. Gaskell advises owners of UK businesses on valuation, marketing and sale as part of the senior sales team at Blacks Brokers. He works across the sectors the firm covers, including hospitality, retail, healthcare, professional services and manufacturing. Blacks Brokers has more than fifteen years of UK business transfer experience and is part of the Business Transfer Group.

Last reviewed: September 2026. Tax rates, reliefs and filing deadlines change, and the figures cited here are stated with their effective dates. Confirm the current position with a qualified adviser before acting.