Adjusted EBITDA sale-price scenario
Use this to normalise reported EBITDA before testing a sale multiple. Add-backs should be genuinely non-recurring and defensible to a buyer.
Adjusted EBITDA: —
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How much can I sell my business for?
The sale price is not simply “profit × a number”. Buyers will test the earnings, working capital, debt, assets, customer relationships, contracts, management team and risks. They may also structure the price with deferred consideration, earn-outs or other terms, so headline value and cash received at completion can be different.
How to adjust EBITDA before a sale
Normalisation aims to estimate the earnings a buyer could reasonably expect after completion. Possible adjustments include genuinely exceptional professional fees, non-recurring costs and some owner-related expenses. But recurring costs should not be removed merely to improve the number, and a buyer may add a market-rate management cost if the current owner performs a role that needs replacing.
Boosting your multiple
Rather than cosmetically changing the accounts, focus on reducing risk: diversify customers, document processes, build management depth, protect IP, improve recurring revenue, clean up financial reporting and reduce dependence on the owner. These changes can make earnings more transferable and easier to diligence.
Creating competition among buyers
A valuation is an estimate; a competitive sale process can reveal what strategic and financial buyers are actually prepared to pay. Different buyers can value synergies differently, so the highest defensible offer may not equal a formula-derived standalone value.
Tax and legal considerations
The tax treatment can differ depending on whether you sell shares, sell business assets, operate as a sole trader or partnership, and whether reliefs apply. GOV.UK provides current guidance on selling a business and Business Asset Disposal Relief. Do not use the calculator to estimate tax due.
How a professional adviser can help
An accountant, corporate-finance adviser, business broker, solicitor or specialist valuer can help normalise earnings, prepare information for buyers, select market comparables, structure the process and identify tax or legal issues. Their role becomes more important as deal size and complexity increase.