How to value a UK business

Start with the business, not a headline multiple

A price needs context: what is being sold, the date, the purpose and the rights included. A minority shareholding, the whole company and a collection of assets can have very different values. Owner dependence, contracts, concentration and capital needs change the risk a buyer takes.

Make earnings comparable

For an earnings scenario, start with EBITDA and adjust only for supported items. Deduct an extra management cost where the owner must be replaced and the accounts do not already cover that cost. Keep a schedule of each adjustment and evidence. A recurring expense does not become a valid add-back simply because a seller would prefer to exclude it.

• Use a consistent accounting period.
• Reconcile EBITDA to the accounts.
• Document one-off costs and market-rate management pay.

Move from enterprise value to equity

An EBITDA multiple produces an enterprise-value scenario. A simplified cash-free, debt-free bridge adds surplus cash and deducts debt and agreed debt-like items. Normal working capital is assumed. Do not add the ordinary operating assets again: their contribution is already reflected in earnings. A buyer and seller must agree the detailed definitions.

Use a second lens

Net assets can be useful where tangible assets drive value or profits are weak. Use current realisable values and all liabilities, not just historic book values. Forecast-based methods require defensible cash flows and discount rates. A scenario calculator cannot replace transaction comparables, a site visit or professional judgement.