Get a realistic estimate of your business value using three valuation methods: revenue multiple, EBITDA multiple and asset-based. See the full range and understand which method a buyer or investor would use for your business type.
| Method | Multiple Used | Valuation | Best For |
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Business valuation is not an exact science — it is a negotiation anchored in methodology. Different buyers use different methods depending on the business type, size and stage. Understanding which method applies to your business, what multiples are typical in your sector, and what factors increase or decrease your multiple is essential whether you are planning a sale, raising investment or simply understanding your net worth.
Common for high-growth or pre-profit businesses, especially SaaS. Valuation = Annual Revenue × Multiple. SaaS: 3–8× ARR. Professional services: 0.5–1.5×. E-commerce: 0.5–2×. Revenue multiples are driven by growth rate, recurring vs one-off revenue, and customer concentration. Higher growth = higher multiple.
The most common method for profitable SMEs. Valuation = EBITDA × Multiple. Professional services: 4–8×. Manufacturing: 4–7×. Hospitality: 3–6×. EBITDA multiples are affected by business risk, customer concentration, owner dependency, competitive position and growth trajectory.
Used for asset-heavy businesses, distressed companies or those being wound down. Net Asset Value = Total Assets − Total Liabilities. Rarely used for service businesses with few tangible assets. Often the floor value — no rational buyer would pay less than NAV for a going-concern business unless it is loss-making.
Key value reducers: high owner dependency (business cannot run without the founder), customer concentration (top 3 customers = 60%+ of revenue), declining revenue trend, no recurring revenue, poor financial records, pending litigation, key staff dependency. Addressing these before a sale typically increases the final valuation by 20–50%.
Most UK small businesses are valued using an EBITDA multiple — typically 3–8× for service businesses and 4–10× for product/SaaS businesses. The exact multiple depends on growth rate, recurring revenue, customer concentration, owner dependency and competitive position. Businesses under £500k EBITDA typically attract lower multiples than larger businesses due to size risk.
Revenue multiples by sector: SaaS/software 3–8× ARR, professional services 0.5–1.5× revenue, e-commerce 0.5–2× revenue. EBITDA multiples: SaaS 10–20×, professional services 4–8×, manufacturing 4–7×, hospitality 3–6×. Growth rate is the single most powerful multiple driver — a business growing 30%/year commands a meaningfully higher multiple than one growing 5%/year.
Key levers: (1) Grow recurring revenue — monthly retainers beat project fees. (2) Reduce owner dependency — document processes, build a management team. (3) Diversify customer base — no single customer above 15% of revenue. (4) Improve EBITDA margins — buyers pay on profit, not revenue. (5) Clean up financials — 3 years of clear, accountant-prepared accounts. Addressing these 12–24 months before a sale maximises your exit value.