Profit multiple sensitivity calculator
Enter maintainable annual profit and move the multiple. The table deliberately shows scenarios, not a claim that any one multiple is appropriate for your business.
How many times profit is a business worth?
There is no single rule of thumb that is reliable across UK businesses. “Profit” can itself mean net profit, adjusted operating profit, EBITDA or another maintainable earnings measure. The multiple then depends on the market evidence and the risk attached to those earnings.
What changes a profit multiple?
Factors a buyer may consider include growth, recurring revenue, customer concentration, margins, management depth, owner reliance, cash conversion, capital expenditure, sector prospects, competitive position, contracts and the quality of financial records.
Use maintainable profit, not an unusual year
Before applying any multiple, strip out genuinely non-recurring items and think carefully about costs that a buyer will still need to incur. An optimistic add-back can inflate the headline number but will not survive robust due diligence.
Profit multiple vs EBITDA multiple
EBITDA is often used to compare operating performance before financing, tax, depreciation and amortisation. If your valuation discussion is framed around EBITDA, use our EBITDA business valuation calculator, which also separates enterprise value from equity value.
What is the rule of thumb for valuing a company?
Rules of thumb are best treated as a first-pass sense check. They can be dangerous when they are detached from sector transactions or when the underlying earnings are not comparable. For a transaction, use current market evidence and professional judgement.
Reference
The British Business Bank valuation guide describes multiple valuation methods and explains why no single approach fits every business.