We value sole-director companies, family firms, professional practices and other owner-managed businesses on a proportionate basis: thorough enough to be relied on, without the cost structure of a large-company valuation.
When is this valuation required?
- You are retiring or selling and want to understand realistic value before approaching buyers.
- A co-owner is leaving and you need a fair basis for the buyout.
- Your accountant needs a valuation for a share transfer or a tax return.
- The business is an asset in a divorce.
- You are bringing in a new partner, investor or member of the family.
Who instructs us?
- Owners of SMEs and family businesses
- Partners and co-directors
- Accountants acting for owner-managed businesses
- Family solicitors and executors
What exactly is valued?
We value the business as a going concern and, where relevant, the owner's shareholding or partnership interest. In owner-managed businesses we pay particular attention to how much of the value is transferable to a new owner and how much would leave with the current one.
How is value assessed?
Earnings are adjusted to a commercial basis. If an owner takes a low salary and large dividends, a buyer would need to pay someone to do that job, so a market salary is deducted. If personal costs run through the business, they are added back. The resulting maintainable earnings are the starting point for most small-business valuations.
The multiple applied to those earnings reflects size, risk and transferability, and is usually lower than for larger businesses because buyers face more risk. Where the business owns significant assets, or earnings are unreliable, we also consider the asset position. Goodwill that is personal to the owner is distinguished from goodwill that belongs to the business.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings after a market salaryUsual starting point
- MarketMultiples for smaller, owner-managed businessesCross-check
- AssetNet assets, where significant or earnings are unreliableWhere relevant
What factors influence the result?
- Owner remuneration
- The difference between what the owner takes out and what it would cost to replace them.
- Personal and transferable goodwill
- Whether customers deal with the business or with the individual.
- Customer concentration
- Dependence on a few customers, a single contract or a single referral source.
- Record keeping
- The reliability of accounts prepared mainly for tax purposes.
- Staff and continuity
- Whether key staff would stay and whether the business runs without the owner day to day.
- Premises and leases
- Lease terms, rent and whether the business could move.
What information is required?
- The last three years' accounts and current management figures
- Details of the owners' salaries, dividends, pension contributions and benefits
- A breakdown of main customers and contracts
- Lease and premises information
- Any previous offers or valuations
We send a tailored information request once the scope is agreed.
What report will you receive?
For most small businesses we provide a concise valuation report that explains the adjustments made to earnings, the approach and multiple applied, and the conclusion. Where the valuation is for a tax return, divorce or proceedings, the report is prepared to the standard that purpose requires.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Small-business valuations are usually among the quickest we undertake, provided the accounts and owner information are available. Delays most often come from incomplete records, so it helps to gather them before we start.
How much does it cost?
We aim to keep fees proportionate to the size of the business and the purpose of the valuation. The quotation reflects the work actually required, which we confirm in writing before starting.
How our fees are set →Frequently asked questions
How much is my small business worth?
It depends mainly on the profit a buyer could expect to earn after paying a market salary for the work you do, the risk attached to those profits, and how much of the business would transfer to a new owner. A valuation sets these out and reaches a reasoned figure.
Why does my own salary matter?
Because a buyer would need to pay someone to replace you. If you pay yourself less than the market rate, the business's profit looks higher than a buyer would actually receive, and the valuation adjusts for this.
Is my business worth anything without me?
Often yes, but less than if it ran independently. We assess which customers, contracts, staff and systems would remain after you leave.
Can you value a business from its tax accounts?
Yes, but tax accounts are often prepared to minimise taxable profit and may not show the full economic picture. We work with you to identify the adjustments needed.
Do small businesses sell for a fixed multiple of profit?
No. Rules of thumb circulate in many sectors, but actual value depends on the risk, transferability and quality of earnings of the particular business.
