What is your business worth

What is your business is worth

As a business owner, do you often ask yourself what is your business worth? Many owners do. Yet when the moment comes to raise capital, bring in a new partner or plan an exit, instinct is never enough. Lenders want a figure they can underwrite, investors need evidence that the price matches potential and HMRC expects tax liabilities to be calculated on a solid footing. A credible valuation also brings clarity to day‑to‑day choices: which projects to pursue, how aggressively to expand and when to conserve cashflow.

Put simply, understanding what your business is worth turns abstract ambition into measurable opportunity. It helps you see whether hard work is translating into shareholder value and whether today’s decisions protect – or dilute – tomorrow’s sale price. It is also the keystone of wider advisory disciplines. At RPGCC we rarely look at valuation in isolation; it feeds directly into corporate tax planning, financial forecasting and succession strategies for entrepreneurs and family‑owned firms alike.

With the main corporation tax rate now 25% for profits above £250,000 and business asset disposal relief still capping the 10% rate at a £1m lifetime limit, a realistic valuation can save, or cost, six‑figure sums when you eventually cash out. Competition for customers, staff and investment is intensifying. Knowing what your business is worth has never been more valuable.

What is your business worth – why knowing what your business is worth matters

A formal valuation transforms gut feeling into a decision‑ready metric.

• Mergers and acquisitions: Buyers benchmark offers against audited valuations, not owner optimism.
• Fundraising: Equity investors set terms around pre‑money value, while banks use asset‑backing ratios.
• Tax efficiency: Share schemes, gift reliefs and inheritance tax calculations all start with an agreed value.
• Personal planning: Clear numbers inform life assurance cover, divorce settlements and retirement timing.

Without a benchmark, negotiations stall, advisers guess and opportunities slip past.

Factors influencing what your business is worth

Several forces push the needle on value. Here are some of the most common.

• Tangible assets: Property, plant and equipment on the balance sheet – physical collateral still matters to lenders.
• Recurring revenue: Contracted income streams – subscription or maintenance fees deserve higher multiples.
• Cashflow strength: Predictable surplus cashflow signals both resilience and dividend capacity.
• Market position: Share of a growing niche – niche leaders usually attract strategic premiums.
• Intellectual property: Patents, trademarks and proprietary tech – unique assets reduce competitive risk.
• Management depth: A business that runs without its founder is simply worth more.

Taken together, these elements explain what your business is worth today – and hint at what it could be tomorrow.

What is your business worth – valuation methods accountants use

We blend several approaches to capture a rounded picture.

1. Earnings multiples: Profits after tax multiplied by a sector‑specific factor. UK private companies typically fetch 5–8  times sustainable earnings, but high‑growth tech firms can exceed 12 times.
2. Discounted cashflow (DCF): This is future free cashflows, discounted back at a rate reflecting risk. DCF highlights the sensitivity of value-to-growth assumptions and working‑capital discipline.
3. Asset‑based valuations: Net realisable asset values are useful for property and manufacturing businesses.
4. Comparable transactions: Recent deal data in the same sector provides real‑world price anchors.

Method selection depends on the business model, data quality and purpose of the exercise, yet each method ultimately answers the same question: what is your business worth right now?

How valuation feeds corporate tax planning

Valuation and tax are joined at the hip. Knowing what your business is worth allows us to plan the following.

• Exit routes: Structure share sales to maximise business asset disposal relief at 10%.
• Group reorganisations: Set arm’s‑length prices for asset transfers and minimise stamp taxes.
• Employee incentives: Price growth shares fairly, keeping HMRC onside and staff motivated.

HMRC collected £93.3bn in corporation tax in 2023/24, up 15 % year‑on‑year (HMRC, 2024). A small percentage swing driven by valuation errors can materially affect the cheque you write.

What is your business worth? – Funding growth, succession and exit

Armed with a clear figure, owners can plot the road ahead.

• Growth funding: Private equity terms turn on what your business is worth pre‑investment. Over‑valuation risks down‑rounds; under‑valuation gives away control.
• Bank facilities: Asset valuations underpin covenant packages and interest margins.
• Succession: Management buy‑outs need an achievable price, usually funded out of future cashflows.
• Exit timing: When the Office for Budget Responsibility forecasts UK Gross domestic product (GDP) growth of 1.8% in 2025 (OBR, 2025), vendors may decide to ride the upswing before selling.

Getting ready for an independent valuation – practical steps

Preparation pays, so consider the following.

• Financial housekeeping: Year‑end accounts, management packs and forecasts – consistent data builds confidence.
• Legal tidiness: IP registrations, contracts and lease paperwork – eliminate deal‑breaking gaps.
• Strategic narrative: Market research, competitive analysis and risk registers – articulate why the future will be brighter than the past.
• Advisory team: Engage specialists in valuation, corporate tax planning and financial forecasting early.
• Stakeholder alignment: Shareholders, lenders and key employees – set expectations around timelines and confidentiality.

Each action helps external valuers – and potential buyers – see the same upside you do.

Putting valuation insights to work

Knowing what your business is worth is not the end of the story; it is the start of better strategy. With a robust value on paper, you can target improvements with the highest impact on multiples, from locking in recurring revenue to strengthening the management bench. The number also acts as an early warning system – if value drifts down, corrective action can be taken before lenders or investors ask awkward questions.

Just as importantly, regular valuations create a shared language between owners, advisers and would‑be acquirers. Decisions around tax structure, debt levels and growth investment all become easier when everyone can see how each option moves the valuation dial. Our team at RPGCC integrates valuation findings into holistic advice, linking them to cashflow forecasts, tax modelling and audit assurance. The result is a roadmap that protects value while unlocking fresh opportunities.

Are you curious to find out what your business is worth?  Talk to us today – we’ll give you the numbers and the strategy to back them.