Business buyers aren’t paying for what your business has been, they’re paying for what it can keep doing without you.

That’s the key difference between a company that sells for three times earnings and one that sells for six.

When valuers and buyers assess a business, they focus on four fundamental elements: profit, growth, risk, and transferability.

Each factor either adds or subtracts from the headline valuation multiple. Let’s look at how each one works in practice.
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Profit – The Engine of Value

Profit is the starting point of every valuation. But buyers don’t care about reported profit; they care about sustainable, maintainable profit.

•    If your accounts show strong, consistent earnings over three years, confidence rises and the multiple improves.
•    If profits swing wildly, or are propped up by one-off contracts, buyers assume volatility — and the multiple falls.
•    A business showing £500k in consistent, recurring EBITDA over several years is far more valuable than one showing £700k with peaks, troughs, and dependencies.

The message: clean, repeatable profit sells; spikes and stories don’t.
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Growth – The Multiplier Effect

Growth is what turns a decent deal into an exceptional one.

Buyers will pay a premium if they can see credible, achievable growth that doesn’t rely solely on luck or personality.

Examples of growth factors that increase value:

•    A proven ability to scale profitably (e.g., adding customers without adding excessive cost).
•    New or protected markets (geographic or sector diversification).
•    Intellectual property, contracts, or systems that allow expansion without founder involvement.
•    Recent investment in technology or automation that unlocks future margin gains.

Conversely, a “mature” or flat business, even if profitable, may command a lower multiple because the upside is limited. Buyers pay for future potential, but only if they can see how it’s achieved.

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Risk – The Silent Valuation Killer

Every risk reduces value because it increases the buyer’s uncertainty about future returns.

Professional buyers run through a mental checklist of vulnerabilities, such as:

•    Customer concentration: one client generating over 20% of turnover.
•    Owner dependency: where the business revolves around you personally.
•    Key staff reliance: no second-in-command or succession plan.
•    Supplier or product reliance: single-source risk or outdated offering.
•    Weak financial systems: missing management accounts, unclear forecasting, poor debtor control.
 

Each red flag chips away at confidence. Even if profits look strong, too much dependency or risk means the buyer has to work harder post-acquisition and they’ll adjust the price accordingly.

Risk doesn’t just lower multiples; it can kill a deal outright.
Reducing risk through better management, processes, and documentation is often the fastest way to lift value without increasing turnover.
 

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Transferability – Can It Run Without You

Transferability is what ultimately decides whether a business is sellable at all.

Buyers need to know that the business will perform the same after completion as it did before. If it can’t, they’ll discount the price heavily or walk away.

Key indicators of transferability include:

•    A capable management team with delegated responsibility.
•    Documented systems and procedures (operations, finance, HR, sales).
•    Strong customer relationships managed by the team, not the owner.
•    Clean, transparent data rooms and well-organised records.
 

If the business relies on your relationships, charisma, or daily involvement, it’s not a saleable asset, it’s a well-paid job.
True value comes from creating an organisation that runs under management, not under the founder’s thumb.
 

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How These Factors Interact

You can think of these four factors as dials on a control panel:

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The more dials you turn up, the higher the multiple you earn.

That’s why two firms with identical profits can have valuations millions apart, one has built an organisation; the other has built a dependency.
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Example: Two Engineering Businesses

Company A:

• Turnover £3.2m, EBITDA £480k, owner still managing day-to-day.

• 80% of revenue from three customers, no formal management team.

• Valuation multiple: 3.5× EBITDA = £1.68m.

Company B:

• Turnover £3.1m, EBITDA £460k, structured team, ISO-certified,

• Recurring maintenance contracts, diversified client base.

• Valuation multiple: 6× EBITDA = £2.76m.

Same size. Same profit. Almost £1.1m difference purely down to risk and transferability.

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The Real Takeaway

Buyers aren’t paying for turnover or history, they’re paying for certainty of future earnings.

Your job as an owner is to make the business look as safe, scalable, and transferable as possible. The less it needs you, the more valuable it becomes.

If you’re unsure how your business would perform under these tests, start with a confidential valuation. We’ll benchmark your company against real UK market data and show where value is being lost or created.