Business valuation calculators
Business Value Gap Calculator
Compare your current indicative enterprise value with the value you want to reach
In short
Your business value gap is the difference between the enterprise value your current maintainable earnings and multiple support today and the value you want at exit. It can be closed by growing adjusted EBITDA, by improving the business so it earns a higher multiple, or by a combination of both over a stated number of years.
Most owners have a number in mind for the business but no measured route to it. This calculator sizes the gap and splits it between earnings growth and business-quality improvement.
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
Enter your current maintainable adjusted EBITDA, a realistic multiple and the enterprise value you want to reach. The calculator will show how much of the gap must be closed through stronger earnings, a better-quality business or a combination of both.
Three illustrative routes
EBITDA growth only
- EBITDA required: £1,000,000
- Multiple held at 4.5x
- Growth needed: 18.6% a year
Multiple improvement only
- EBITDA held at £600,000
- Multiple required: 7.5x
- Requires measurable quality improvement
Balanced combination
- EBITDA: £774,597
- Multiple: 5.81x
- Both levers move together
A higher multiple cannot be achieved simply by selecting it. It follows from the quality of earnings, customers, management and growth behind the business.
Your value gap
Value gap
£1,800,000
- Current indicative enterprise value
- £2,700,000
- Target enterprise value
- £4,500,000
- Gap as a percentage of today
- 66.7%
- EBITDA required at current multiple
- £1,000,000
- Multiple required at current EBITDA
- 7.5x
- Projected EBITDA in 3 years
- £755,827
- Projected enterprise value
- £3,401,222
- Annual EBITDA growth required
- 18.6%
Before you rely on this
- Sector ranges are guidance, not a quotation. Selecting a higher multiple does not make it achievable.
- Enterprise value is not the same as shareholder proceeds. Cash, debt and deal structure change what you receive.
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.
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
- Current indicative value = adjusted EBITDA × current multiple
- Value gap = target value − current indicative value
- EBITDA required at target multiple = target value ÷ target multiple
- Required EBITDA growth rate = (required EBITDA ÷ current EBITDA)^(1 ÷ years) − 1
Worked example: £5m target over four years
| Adjusted EBITDA today | £600,000 |
|---|---|
| Current multiple assumption | 5.0x |
| Current indicative enterprise value | £3,000,000 |
| Target value | £5,000,000 |
| Value gap | £2,000,000 |
| Target multiple assumption | 5.5x |
| EBITDA required at target multiple | £909,000 |
| Implied EBITDA growth over four years | about 11% a year |
Half a turn of multiple improvement reduces the earnings growth needed from about 15% a year to about 11% a year. Both levers are real, but multiple improvement has to be earned through demonstrable risk reduction, not assumed.
What each input means
- Adjusted EBITDA
- Maintainable earnings after add-backs and replacement management cost. Use the Adjusted EBITDA Calculator first if you are unsure.
- Current multiple
- The multiple you believe your business would attract today. Published sector guidance for your size band is a more defensible starting point than an aspiration.
- Target value
- The enterprise value you want the business to reach.
- Target multiple
- The multiple you expect at exit. Assume improvement only where you can name the risks you will remove.
- Years to exit
- The period you have to make the changes.
How to read the result
The gap tells you how much value has to be created. The required growth rate tells you whether the timetable is realistic. If the implied growth rate is far above what the business has ever achieved, the answer is usually a longer runway or a lower target rather than a more optimistic multiple.
What can materially change the result
- The starting multiple assumption, which moves current value pound for pound with earnings.
- Customer concentration, owner dependency and revenue quality, which set whether multiple improvement is credible.
- Capital investment needed to support growth, which can suppress earnings in the interim.
- Sector conditions and buyer appetite at the time of exit.
- Whether growth is organic or acquisitive, which changes the risk a buyer prices.
Limitations
- It does not forecast your earnings; the growth rate shown is what the target requires, not what is likely.
- It does not guarantee any multiple, now or at exit.
- It does not deduct debt, tax or transaction costs, so it is not a proceeds calculation.
When this calculator is appropriate
Use it when you have a value in mind and want to test whether the earnings growth and quality improvement required are realistic in the time available.
When it is not appropriate
Do not use it as a valuation of your business today, or as evidence of value for a shareholder, tax or court purpose.
Bottom line
A value gap is closed with earnings growth and evidenced risk reduction. Multiple expansion is the reward for the second, not an assumption you can plug in.
Questions owners ask
- What is a business value gap?
- It is the difference between the indicative enterprise value your current earnings and multiple support today, and the value you want the business to be worth at exit.
- Should my target be enterprise value or equity value?
- Set the target as enterprise value for planning, because that is what earnings and multiples drive. Then run the equity value calculator to see the proceeds that value would produce.
- How do I choose a realistic multiple?
- Start from the published range for your sector and EBITDA size band, then position yourself inside it using the value drivers, rather than picking the top of the band.
- Can I increase value without increasing EBITDA?
- Yes. Recurring revenue, lower customer concentration, management depth and reduced owner dependence can move a business up its sector range at the same level of earnings.
- What typically improves a valuation multiple?
- Contracted or repeat revenue, diversified customers, documented processes, a management team that runs the business without the owner, clean accounts and credible, funded growth.
- How long does it take to close a value gap?
- Most measurable improvement programmes run over two to three years, because buyers want to see a trend rather than a single strong year.
- Is the target value guaranteed?
- No. The calculation shows what would be required arithmetically. Market conditions, buyer appetite and diligence findings all affect the final outcome.
Related reading
Business exit planning
We turn a value gap into a sequenced plan with the earnings and risk-reduction targets set out year by year.
Where owners usually go next
- Target Exit Value Calculator
Work back from the value you need rather than forward from today.
- Business Value Growth Calculator
Split the value you create between earnings growth and multiple movement.
Written and reviewed by Tony Vaughan, founder and lead adviser, BusinessValuation.co.uk.·Last reviewed: September 2026·How we produce these figures
Talk your figures through with us
A free initial consultation with our team, then a short written indicative range where the situation warrants it. No obligation.