How much is my business worth?
Most owner-managed businesses sell for two to six times normalised annual earnings. Where you land inside that range depends on four things you can check today.
Most owner-managed businesses change hands for two to six times normalised annual earnings. Under €500,000 of earnings the range is usually two to four; above it, four to six. Turnover is not the basis, and net profit as reported is almost never the basis either.
Why the range is so wide
The multiple is a statement about how confident a buyer is that next year looks like this year. Four factors move it more than anything else:
- Size — larger earnings attract more buyers, and competition sets prices
- Customer concentration — a large single customer reduces the number of buyers willing to bid
- Owner dependence — if revenue falls when you take three months off, you are selling a job
- Revenue quality — contracted revenue is worth far more than repeat revenue
A €400,000-earnings business with contracted revenue and a management layer can beat a €900,000 business built on one customer and one person.
Getting to your own number
Start with the earnings figure, not the multiple. Normalise it — take out your own compensation at a market rate, strip genuine one-offs, remove personal costs — and do it for three years rather than the best one. Then apply a multiple you can defend with comparable transactions in your size band.
How to value a business walks the whole sequence; EBITDA multiple explained covers what sets your multiple specifically.