Step 1 · Understand the number
What is an EBITDA multiple, in plain English?
Almost every UK SME transaction is priced off adjusted EBITDA — earnings before interest, tax, depreciation and amortisation, with owner-specific costs added back (excessive director salary, personal vehicles, one-off legal fees, and so on). Buyers then apply a multiple to that number to arrive at an enterprise value.
A business generating £500,000 of adjusted EBITDA in a sector that trades at 5x is worth roughly £2.5m on an enterprise-value basis. Cash and debt then adjust that to a headline equity price. That is the entire arithmetic — everything else in this guide is about which multiple applies to you, and how to move it up.
Step 2 · Benchmark your sector
UK EBITDA multiples by sector (2026 ranges)
These are the published UK & Ireland sector multiples from the Dealsuite M&A Monitor, February 2026 edition, covering completed deals in the second half of 2025. The market average across all sectors is 5.4x normalised EBITDA. They are indicative, not a quote — where you land inside the range is driven by the factors in the right-hand column, and by size.
| Sector | EBITDA multiple | Key value drivers |
|---|---|---|
| Software development | 7.7x – 8.8x (mid 8.2x) | Net revenue retention, gross margin, ARR growth, low churn, IP defensibility. |
| IT services | 7.2x – 8.5x (mid 7.8x) | MRR share, contract length, per-seat pricing, cybersecurity attach rate. |
| Healthcare & pharmaceuticals | 6.9x – 8.2x (mid 7.5x) | CQC rating, NHS/private mix, clinician contracts, catchment, freehold vs leasehold. |
| E-commerce & webshops | 5.5x – 6.9x (mid 6.4x) | Repeat-purchase rate, brand strength, gross margin, platform diversification. |
| Business services | 5.3x – 6.7x (mid 6.0x) | Recurring retainers, non-owner delivery, utilisation, key-client concentration. Wealth management and IFA firms sit on this line. |
| Industrial & manufacturing | 4.9x – 6.1x (mid 5.4x) | Order book, capex intensity, freehold, sector cyclicality. |
| Agriculture & food | 4.3x – 5.6x (mid 5.2x) | Input-cost exposure, contracted offtake, accreditation, asset backing. |
| Media & communication | 3.8x – 4.9x (mid 4.3x) | Retained vs project revenue, client concentration, founder dependence. |
| Hospitality & tourism | 3.9x – 4.9x (mid 4.2x) | Freehold value, brand, seasonality, staff cost as a share of revenue. |
| Automotive, transport & logistics | 3.6x – 4.8x (mid 4.0x) | Contract length, fleet age, fuel exposure, warehouse ownership. |
| Construction & engineering | 3.5x – 4.6x (mid 3.9x) | Framework contracts, project-mix visibility, working capital, HSE record. |
| Wholesale trade | 3.1x – 4.3x (mid 3.6x) | Supplier terms, stock turn, margin durability, customer concentration. |
| Retail trade | 2.7x – 4.2x (mid 3.4x) | Like-for-like growth, lease terms, footfall, online mix. |
Multiples sourced from the Dealsuite UK&I M&A Monitor, February 2026. dealsuite.com
Size moves the multiple more than sector does
The same business is worth a higher multiple simply for being bigger — earnings are more stable, management is less owner-dependent, and more buyers can fund the deal. These are the published size points our engine interpolates between:
| Normalised EBITDA | Base multiple (all sectors) |
|---|---|
| £200k | 3.3x |
| £500k | 4.3x |
| £1m | 4.9x |
| £2m | 5.6x |
| £5m | 7.1x |
| £10m | 8.4x |
Below £200,000 of normalised EBITDA the source publishes no multiple — the risk premium is too case-specific, earnings are unstable year to year, and value is driven by potential rather than current profit. Our engine declines at the same boundary rather than inventing a figure. Multiples sourced from the Dealsuite UK&I M&A Monitor, February 2026. dealsuite.com
Step 3 · Move the multiple
What actually moves your multiple up
- Recurring revenue. Every 10% of revenue you can show as contracted or subscription typically adds 0.3x–0.7x to the multiple.
- Owner-independence. If the business runs for 30 days without you touching it, buyers pay more — often the single biggest lever.
- Customer concentration. No single client above 15% of revenue. Above 25% and buyers discount aggressively.
- Clean financials. Xero/QuickBooks, monthly management accounts, reviewed by an accountant. Poor books cost you 1x–2x on the multiple alone.
- Growth rate. A business growing 20%+ YoY trades at a materially higher multiple than a flat one, even in the same sector.
- Sector tailwind. Regulated, AI-adjacent, or consolidating sectors (IFA, MSP, dental, specialist accountancy) all attract premium buyers today.
Step 4 · Get an evidence-backed number
From a range to your number
A sector table like the one above is the starting point, not the answer. Two businesses in the same sector, with the same EBITDA, routinely sell for very different prices — the difference is almost always in the drivers above, not the sector.
Our free AI valuation tool takes about 60 seconds. It asks for the same inputs a corporate-finance adviser would ask for (sector, revenue, EBITDA, recurring %, owner hours, top-client %) and returns an evidence-backed range against live UK comparables — plus the specific things you could change to push your number higher before you go to market.
Free AI valuation — the first step of any exit
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Related
Keep going
- → Sector comparables — what businesses like yours have actually sold for.
- → Deal readiness check — score how sale-ready your business is today.
- → Transaction timeline — how long a UK SME sale actually takes.
- → Partnership route — sell a stake now, glidepath to a full exit later.