Company valuation for UK SME owners

Buyers in the UK lower mid-market value owner-managed businesses on a multiple of adjusted EBITDA. The sector matters; the structural characteristics of the business matter more. Below is the honest version of how multiples are set in practice today.

The sector base range. Different sectors trade at different base multiples because of buyer competition, growth profile, regulatory barriers and capital intensity. Healthcare services (dental, vet, mental health) currently trade at 8-12x EBITDA at the lower mid-market. Tech-enabled services trade widely from 6x EBITDA on pure services up to ARR-based valuations of 3-8x ARR for SaaS components. Professional services 5-10x. Business services 5-9x. Light industrials 5-8x. Logistics 5-10x depending on sub-segment. See the sectors hub for sector-specific detail.

The recurring revenue premium. Within any sector, recurring or contracted revenue commands a meaningful premium to project / one-off revenue. The premium is typically 1-2 turns of multiple. Pre-process work to surface the recurring component properly is one of the highest-return preparation activities.

Customer concentration discount. Single-client concentration above 25-30% typically discounts the multiple even where the relationship is deep. Above 50% it materially narrows the buyer pool. Multi-anchor concentration with documented relationship depth sits differently — we help owners document and defend depth pre-process.

Growth trajectory and operating leverage. Buyers reward demonstrated growth and a credible path to operating leverage. Flat or declining EBITDA trades at the lower end of the sector range; consistently growing EBITDA at the upper end. Buyers also look at margin trajectory, not just revenue growth.

Management depth and founder dependency. Owner-managed businesses where the founder is the load-bearing structure consistently trade at the lower end of the sector range. The single biggest pre-process intervention is building out the senior team that lets buyers see a business that can run without the founder.

Adjusted EBITDA is the basis on which most lower mid-market UK businesses are valued. It is reported EBITDA — adjusted for items that distort the view of sustainable run-rate profitability. The buyer will run their own version. Yours needs to be defensible to the line before going to market.

Owner discretionary adjustments. Above-market owner salary (where the owner has taken below or above market compensation, the adjustment normalises it). Personal expenses run through the business. Family member salaries above market rate. Property rent at non-market levels. Each adjustment is straightforward to defend in principle but only with proper documentation.

One-off and non-trading items. Genuine one-off costs (restructuring, settlements, write-offs of specific items, one-time professional fees on M&A or financing) are typically adjusted out. Wear-and-tear costs that are recurring even if irregular are not. The buyer will challenge any line that looks recurring; defending it requires documentation.

Pro-forma adjustments. Where significant business changes have happened part-way through the trading history (acquisitions, disposals, restructurings), pro-forma EBITDA presents the EBITDA as if those changes had been in place throughout. Buyers typically accept pro-forma adjustments where they are documented properly.

Working capital normalisation. Not strictly part of EBITDA but central to the completion mechanism. Buyers will look at average working capital over the last 12-24 months, identify any one-off swings, and set a working capital target. Pre-process work to surface working capital properly avoids significant late-stage disputes.

We help owners build the EBITDA bridge and the working capital position cleanly as part of every sell-side engagement, and as part of any exit planning engagement that starts 12+ months out from a sale.

Sector-specific multiple ranges, buyer pool composition and diligence focus areas are covered in the sector pillar pages. Below is the headline orientation — for the detail in your sector, follow the link.

Healthcare services. 7-12x EBITDA range, very active PE consolidator pool, sector-specific regulatory diligence. Dental, vet, care, mental health and specialist clinics each have distinct sub-sector dynamics.

Tech-enabled services. Wide range. Pure services at 6-10x EBITDA; SaaS components at 3-8x ARR. Buyer pool international with US and Nordic strategics active alongside UK PE consolidators.

Professional services. 5-10x EBITDA range, active PE consolidators in accountancy, legal and consulting. Partner alignment is the critical structural factor.

Business services. 5-9x EBITDA range. PE consolidators across HR, payroll, FM, cleaning and recruitment. Recurring revenue and customer concentration drive intra-range positioning.

Light industrials. 5-8x EBITDA range for general specialist manufacturing; premium ranges for businesses with defensible IP and international revenue. International strategic buyer pool.

Logistics and distribution. 5-10x EBITDA depending on sub-segment. Cold-chain and specialist 3PL at the upper end; pure haulage at the lower end. Recent transaction experience in cold-chain logistics and container leasing.

If you would like an indicative valuation range for your specific business, book a confidential conversation. Forty-five minutes, no obligation, and we will share the indicative range with the reasoning behind it.