Is this calculator free?

Yes. This calculator is free to use, and you do not need to register or provide an email address to see your result. Contact details are requested only if you choose to receive a summary report or request a confidential review.

Is this a formal business valuation?

No. This calculator does not value your business. It gives an indicative measure based on the information and assumptions entered, and it is not suitable for HMRC, court, EOT, EMI, lending, probate, matrimonial, shareholder-dispute or other formal purposes.

How do buyers calculate adjusted EBITDA?

They start from reported EBITDA in the latest full year of accounts, add back evidenced personal, one-off and above-market costs, and deduct costs a new owner would have to carry, such as a market-rate managing director. The calculator follows the same bridge.

What is adjusted EBITDA?

Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, restated to show the maintainable profit a new owner would inherit. Personal, exceptional and above-market costs are added back, and costs the buyer must incur are deducted.

What is the difference between operating profit and EBITDA?

Operating profit is stated after depreciation and amortisation. EBITDA adds those two non-cash charges back, which is why buyers start there before applying a sector multiple.

Which add-backs do buyers normally accept?

Evidenced personal expenses, genuinely one-off legal or restructuring costs, exceptional bad debts, above-market related-party rent and excess owner or family remuneration are the most commonly accepted, provided each is documented.

Should owner remuneration be added back in full?

No. Only the excess above a market salary for the work actually performed should be added back. If the owner runs the business day to day, the cost of replacement management must be deducted.

Can projected savings be included?

Only where a saving is already contracted or implemented and can be annualised with evidence. Speculative future savings are routinely rejected in diligence.

Why might a buyer reject an adjustment?

Usually because it is not evidenced, because it recurs every year despite being labelled one-off, or because the cost would still be incurred under new ownership.

Free calculator

Value today

Free Adjusted EBITDA Calculator for UK SMEs

Move from reported profit to an indicative maintainable adjusted EBITDA.

Cost: Free
Sign-up: Not required
Result: Immediate
Report: Optional
Status: Indicative only

In short

Adjusted EBITDA is your reported EBITDA restated to show the maintainable profit a new owner would inherit. You add back personal, genuinely one-off and above-market costs, then deduct costs a buyer would have to incur, such as replacing the owner. Buyers apply a sector multiple to this figure rather than to statutory profit.

Buyers price UK SMEs on maintainable adjusted EBITDA, not the profit figure in your statutory accounts. This calculator builds the bridge line by line so you can see what a buyer might accept and what they are likely to challenge.

Part of the business valuation calculators suite from BusinessValuation.co.uk. Your result is saved in this browser, so you can compare it with your other calculator results.

How to use this calculator

Start with the profit figure from your latest reliable annual or management accounts. Add only costs that are genuinely personal, exceptional or above market. Deduct any costs a buyer would need to incur that are not already reflected in the accounts.

Choose the figure you want to work from.

Operating profit

£650,000

Depreciation

£80,000

Amortisation

£0

Only costs a new owner would not inherit.

Excess owner remuneration

Only the amount above a market salary for the role.

£60,000

Excess family-member remuneration

Pay above market rate for work actually performed.

£0

Personal or non-business expenses

Vehicles, travel, subscriptions not needed by a new owner.

£12,000

One-off legal and professional fees

Project-based costs with a clear start and end.

£0

One-off restructuring or recruitment costs

Redundancy, relocation, search fees.

£0

Exceptional bad debts

Genuinely exceptional, not a normal trading pattern.

£0

Above-market related-party rent

The excess over an open-market rent.

£0

Evidenced annualised cost savings

Already contracted or implemented, with evidence.

£0

Other evidenced add-backs

Describe these below.

£0

Describe your other add-backs

Costs a buyer must incur that the accounts do not show.

Replacement management cost

What a buyer must pay to replace the owner's role.

£75,000

Below-market related-party costs

Rent or services charged below market rate.

£0

Other deductions

Describe these below.

£0

Describe your other deductions

Your calculation

Indicative adjusted EBITDA

£727,000

Reported EBITDA: £730,000
Add total add-backs: £72,000
Less total deductions: -£75,000
Indicative adjusted EBITDA: £727,000
Change against reported: -£3,000
Percentage change: -0.4%

Calculation bridge

Reported EBITDA£730,000
Add-backs£72,000
Deductions£75,000

Adjusted EBITDA = Reported EBITDA + Add-backs - Deductions

Before you rely on this

An adjustment is not automatically accepted by a buyer. Each item must be genuine, evidenced and relevant to the costs a new owner would inherit.
Every add-back must survive buyer diligence. Undocumented adjustments are usually removed during the process.

Indicative estimate only

Your result is an indicative estimate based on the information you provided. It is not a formal valuation or a guaranteed sale price. Unless stated otherwise, it assumes a sale of 100% of the business on a cash-free, debt-free basis with normal working capital. The price ultimately achieved will depend heavily on the sale process, buyer interest, due diligence, deal terms, market conditions and the experience of any adviser used.

Next steps

Your result is above and stays visible. If it would help, we can send it to you or review it with you confidentially.

Would you like an experienced adviser to review your result?

A calculator provides a useful starting point. A confidential discussion with an experienced business valuation adviser can help you test the assumptions, understand what buyers may pay and decide whether a formal valuation is needed.

Discuss my valuation with an adviser Request a confidential valuation review

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Important information

This calculator provides general, indicative guidance based solely on the information entered. It is not a formal business valuation, tax calculation, legal opinion or recommendation to accept or reject an offer. Actual value and sale proceeds depend on detailed financial, commercial and transaction-specific factors.

How this calculation works

Reported EBITDA = operating profit + depreciation + amortisation
Adjusted EBITDA = reported EBITDA + evidenced add-backs − buyer-side deductions
Uplift % = (adjusted EBITDA − reported EBITDA) ÷ reported EBITDA

Worked example: owner-managed engineering company

Worked example: owner-managed engineering company
Operating profit	£620,000
Depreciation and amortisation	£80,000
Reported EBITDA	£700,000
Add back: owner pay above market rate	+£90,000
Add back: evidenced personal motor and travel costs	+£18,000
Add back: one-off tribunal and legal fees	+£25,000
Deduct: cost of a general manager to replace the owner	−£85,000
Indicative adjusted EBITDA	£748,000

The bridge adds £133,000 of add-backs and deducts £85,000 of replacement management cost, producing £748,000. On a 5.0x multiple that is a £240,000 difference in indicative enterprise value against the reported figure, which is why every add-back has to be evidenced.

What each input means

Starting point: Either operating profit from your latest reliable accounts, or a reported EBITDA figure you already trust. Use audited or reviewed figures where they exist.
Depreciation and amortisation: Non-cash charges taken from the notes to the accounts, added back to reach EBITDA.
Excess owner and family remuneration: Only the amount above a market salary for the work actually performed. Total pay is not added back.
Personal or non-business expenses: Costs a new owner would not incur, supported by invoices or payroll records.
One-off legal, restructuring and exceptional items: Genuinely non-recurring costs. Items that appear every year are recurring, whatever they are labelled.
Above-market related-party rent: The excess over an open-market rent for comparable premises, evidenced by comparison.
Evidenced annualised cost savings: Only savings already contracted or implemented and capable of annualisation.
Replacement management cost: The cost of hiring someone to do the work the owner currently does, deducted where the owner is operationally involved.

How to read the result

The result is an indicative maintainable earnings figure. It is the base a buyer would apply a multiple to, so a change here moves headline value by roughly the multiple times that change. It is not a valuation on its own, because the multiple depends on the quality and risk of the earnings.

What can materially change the result

Whether each add-back is documented well enough to survive diligence.
How operationally involved the owner is, which sets the replacement management deduction.
Whether the accounts used are audited, reviewed or unreviewed management figures.
Whether earnings are stable, growing or recovering from a weak year.
Related-party arrangements for premises, vehicles or services.
Revenue quality: contracted, recurring or project-based work behind the profit.

Limitations

It does not apply a multiple and does not produce a business value.
It does not test whether a buyer will accept any individual adjustment.
It does not normalise for a weak or exceptional trading year across multiple periods.
It does not calculate tax or sale proceeds.

When this calculator is appropriate

Use it when you want to understand the earnings figure buyers will start from, before a sale, an MBO, a refinancing or a valuation instruction.

When it is not appropriate

Do not use it as the earnings figure in an HMRC submission, a court report or a signed valuation. Those require normalised earnings across several periods with disclosed working.

Bottom line

Adjusted EBITDA, not statutory profit, is the number buyers price. Build the bridge with evidence for every line, and deduct the cost of replacing yourself.

Questions owners ask

Is this calculator free?: Yes. This calculator is free to use, and you do not need to register or provide an email address to see your result. Contact details are requested only if you choose to receive a summary report or request a confidential review.
Is this a formal business valuation?: No. This calculator does not value your business. It gives an indicative measure based on the information and assumptions entered, and it is not suitable for HMRC, court, EOT, EMI, lending, probate, matrimonial, shareholder-dispute or other formal purposes.
How do buyers calculate adjusted EBITDA?: They start from reported EBITDA in the latest full year of accounts, add back evidenced personal, one-off and above-market costs, and deduct costs a new owner would have to carry, such as a market-rate managing director. The calculator follows the same bridge.
What is adjusted EBITDA?: Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, restated to show the maintainable profit a new owner would inherit. Personal, exceptional and above-market costs are added back, and costs the buyer must incur are deducted.
What is the difference between operating profit and EBITDA?: Operating profit is stated after depreciation and amortisation. EBITDA adds those two non-cash charges back, which is why buyers start there before applying a sector multiple.
Which add-backs do buyers normally accept?: Evidenced personal expenses, genuinely one-off legal or restructuring costs, exceptional bad debts, above-market related-party rent and excess owner or family remuneration are the most commonly accepted, provided each is documented.
Should owner remuneration be added back in full?: No. Only the excess above a market salary for the work actually performed should be added back. If the owner runs the business day to day, the cost of replacement management must be deducted.
Can projected savings be included?: Only where a saving is already contracted or implemented and can be annualised with evidence. Speculative future savings are routinely rejected in diligence.
Why might a buyer reject an adjustment?: Usually because it is not evidenced, because it recurs every year despite being labelled one-off, or because the cost would still be incurred under new ownership.

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