Valuation Partners values owner-managed businesses, private companies and business interests across the UK. We start by fixing what is being valued, why, at what date and on what basis, because the same company can carry a different value for a sale negotiation, an EMI option grant and a financial remedy hearing. The method then follows from the purpose, not the other way round.
When is this valuation required?
- You are thinking about selling and want to know what a realistic price range looks like before you speak to buyers.
- A shareholder is leaving, retiring or being bought out and the parties need a value to work from.
- You are restructuring ownership within a family or management team.
- Your accountant or solicitor needs a valuation for a tax return, a share transfer or a probate submission.
- The value of the business is relevant to divorce or other proceedings.
- You are raising investment and need a supportable view of value before negotiating terms.
Who instructs us?
- Business owners and directors
- Shareholders and partners
- Accountants and tax advisers acting for clients
- Corporate, family and commercial litigation solicitors
- Executors, trustees and investors
What exactly is valued?
We value whole businesses and trading companies, groups and holding companies, and individual ownership interests within them. Where the instruction concerns a particular shareholding, we first assess the business as a whole and then consider the rights attached to the holding being valued.
An important early distinction is between enterprise value (the value of the operating business, before considering how it is financed) and equity value (what belongs to the shareholders after debt, surplus cash and similar items). Confusing the two is one of the most common reasons why owners and buyers talk past each other.
How is value assessed?
Valuers generally draw on three families of approach. The income approach looks at the earnings or cash flows the business is expected to generate, either by capitalising maintainable earnings or by discounting forecast cash flows. The market approach compares the business with transactions in, or pricing of, comparable companies. The asset approach builds value from the business's net assets, and is most relevant to asset-rich, investment or loss-making businesses.
For most profitable trading companies, value is driven by maintainable earnings: the level of profit a purchaser could reasonably expect to continue, after adjusting for one-off items, owner remuneration that differs from a market salary, and costs or income that would not survive a change of ownership. The multiple or discount rate applied to those earnings reflects the risk and growth prospects of the particular business.
Where more than one approach is relevant, we use them to test each other and explain how we arrived at a single figure or a range. We do not apply a standard multiple across sectors or businesses.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings or discounted cash flowUsual starting point
- MarketComparable transactions and companiesCross-check
- AssetNet assets, for asset-rich, investment or loss-making businessesWhere relevant
Enterprise value and equity value
Enterprise value measures the business itself. To reach the value of the shares, we adjust for net debt, surplus cash, debt-like items such as deferred tax or unpaid liabilities, and any working capital that is above or below a normal level. Two businesses with the same enterprise value can have very different equity values.
What factors influence the result?
- Quality of earnings
- How reliable, recurring and well evidenced the profits are, and how much they depend on a small number of customers or contracts.
- Owner dependence
- Whether the business could continue without the current owner's relationships, skills or personal goodwill.
- Growth and forecasts
- Whether forecasts are supported by the trading record, the order book and the wider market.
- Balance sheet
- Working capital needs, debt, surplus cash and assets that are not needed for the trade.
- Market conditions
- Interest rates, sector sentiment and the availability of buyers and finance at the valuation date.
- Rights being valued
- Whether the subject is the whole company or a holding that does not carry control.
What information is required?
- Statutory accounts for recent years and up-to-date management accounts
- Budgets or forecasts, with the assumptions behind them
- Details of directors' and owners' remuneration and benefits
- Customer, supplier and contract information where relevant
- The articles of association and any shareholder agreement
- Details of debt, leases and other significant commitments
We send a tailored information request once the scope is agreed.
What report will you receive?
Depending on the purpose, we provide anything from a limited-scope indicative opinion to a detailed formal valuation report setting out the scope, the information relied on, the method, the key assumptions and the conclusion. Reports for tax, court or expert determination are prepared to the requirements of that purpose. Our page on types of valuation reports explains the differences.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
A straightforward valuation of a single trading company with up-to-date accounts can often be completed within a few weeks of receiving the information. Groups, businesses with incomplete records or instructions that need a formal report take longer. We confirm a timetable when we agree the scope.
How much does it cost?
The fee depends on the size and complexity of the business, the quality of the information, the purpose of the valuation and the type of report required. We provide a written proposal with the scope and fee before starting.
How our fees are set →Frequently asked questions
How is a business valued in the UK?
By applying one or more recognised approaches, usually based on maintainable earnings, forecast cash flows, comparable market evidence or net assets, and choosing the approach that best reflects how a buyer of that particular business would think about its value. The purpose and basis of value also matter.
Is there a standard multiple for my sector?
No. Published sector multiples can be a useful cross-check, but the appropriate multiple depends on the risk, growth, size and earnings quality of the particular business. Two companies in the same sector can justify very different multiples.
Can you value a business that is not making a profit?
Yes. Loss-making businesses are often valued by reference to their assets, their prospects of returning to profit, or the value of specific assets such as technology or customer relationships. We explain which approach applies and why.
Will the valuation be accepted by HMRC or a court?
No valuer can guarantee acceptance. What we can do is prepare a valuation that applies the correct basis of value for the purpose, explains its reasoning clearly and is supported by the evidence, which is what gives a valuation weight.
Do I need a full report or will a letter do?
It depends on how the figure will be used. A limited-scope opinion can suit an internal decision. A tax submission, a court case or a transaction with third parties usually needs a fuller report. We recommend the appropriate level when we discuss the scope.
Do you value businesses outside England?
Yes. We work throughout the UK and can consider international assignments where they fall within our expertise.
