Fictional worked example
Example Indicative Business Valuation Report
This example uses a completely fictional business and figures generated through the same fixed calculation rules used by the free indicative valuation tool. It is provided to show the type of information the summary contains. It is not a valuation of any real business and must not be relied upon.
Fictional Midlands Engineering Limited
An invented precision-manufacturing business, preparing for a possible 100% sale in 12–24 months. There is no real company, recipient, transaction or offer behind this example.
Business profile used
- Sector: Engineering & Precision Manufacturing
- Trading since: 2000
- People: 11–25
- Owner involvement: A management team runs most daily operations
- Objective: I may sell the business
Sector and owner dependency inform the calculation. Employee band and exact trading year are background only; trading-history band and objective guide adviser enquiry handling. No internal category is shown.
Financial performance and EBITDA bridge
| Actual year | Turnover | Operating profit | Depreciation | Reported EBITDA |
|---|---|---|---|---|
| Year to 2023-12 | £4,100,000 | £400,000 | £80,000 | £480,000 |
| Year to 2024-12 | £4,100,000 | £470,000 | £80,000 | £550,000 |
| Year to 2025-12 | £4,100,000 | £520,000 | £80,000 | £600,000 |
Latest-year reported EBITDA: £600,000. Amortisation is nil in this fictional case. Proposed excess director remuneration: £60,000, confirmed by the fictional owner but not independently verified. Total confirmed add-backs: £60,000. Maintainable adjusted EBITDA used: £660,000.
Earlier actual years inform the trend, not an average earnings basis. No forecast has been supplied. Owner confirmation is not evidence that a buyer would accept an adjustment.
Sector range and six valuation factors
Engineering & Precision Manufacturing; adjusted EBITDA under £1m. Published indicative range: 3.5x–5.5x. Professional judgement, not verified transaction prices; specialist accuracy review remains outstanding.
| Factor | Answer | Score / 5 | Weight |
|---|---|---|---|
| Recurring or contracted revenue | 50% to 80% | 4 | 20% |
| Customer concentration | 20% to 35% from the largest customer | 2 | 20% |
| Owner dependency | Moderate: I am involved but not essential | 3 | 20% |
| Management depth | Strong second tier in place | 5 | 15% |
| Three-year EBITDA trend | +25% across the latest three actual years | 5 | 15% |
| Quality of financial information | Three years, complete figures | 5 | 10% |
Weighted score 3.80 / 5; position 66% within the range. Applied multiples: 4.62x to 5.02x, central 4.82x.
Indicative enterprise and equity value
- Enterprise value
- £3,050,000 to £3,310,000
- Cash
- £400,000
- Borrowings
- £250,000
- Net cash adjustment
- £150,000
- Equity value
- £3,200,000 to £3,460,000
- Confidence
- High
Indicative values are rounded for presentation. Underlying calculations use the figures entered. Confidence is the engine’s information rating, not a probability of sale or proof of accuracy.
Multiple years of actual results with depreciation, amortisation, cash and debt supplied.
Sensitivity, not a forecast
| EBITDA change | Enterprise value range |
|---|---|
| -20% | £2,590,000 to £2,800,000 |
| -10% | £2,890,000 to £3,130,000 |
| 0% | £3,200,000 to £3,460,000 |
| 10% | £3,500,000 to £3,790,000 |
Sensitivity changes one assumption to show the arithmetic effect; it is not achieved performance, a prediction or an expected uplift.
What moved the value?
Strengths
- Management depth: Strong second tier in place
- Three-year EBITDA trend: +25% across the latest three actual years
- Recurring or contracted revenue: 50% to 80%
Risks and missing information
- Customer concentration: 20% to 35% from the largest customer
- Gross profit, to assess margin quality.
What the six-page summary contains
- 1.Indicative enterprise and equity value
- 2.Financial performance and EBITDA bridge
- 3.Sector range, multiple and sensitivity
- 4.Value drivers and buyer considerations
- 5.Sale preparation and deal structure
- 6.Limitations, next steps and adviser options
This HTML example stands alone. No public customer PDF or private recipient link is provided.
Important limitations
The indication assumes a professionally managed confidential sale process seeking suitable strategic trade acquirers and a 100% sale. Buyer interest, diligence, earnings quality, deal structure and market conditions can change the price materially.
This report provides an automated indicative valuation based solely on information supplied and confirmed by the user. The information has not been independently verified, and no due diligence, quality of earnings review, market testing or professional judgement has been undertaken. Possible EBITDA adjustments have not been independently approved. The result is not a formal valuation, an offer, a guarantee of sale price, or legal, tax, accounting or investment advice. It must not be relied upon for HMRC, court, shareholder dispute, EOT, EMI, lending or other formal purposes. Actual business value and sale proceeds may differ materially. A professional adviser-led valuation may reach a different conclusion.