There have been a few questions regarding valuation multiples paid in the UK small business market. As this is a critical component of the ETA (Entrepreneurship Through Acquisition) model, it is important to first recognise that there is no single definitive answer. Ultimately, valuation is determined by what a willing buyer is prepared to pay and a willing seller is prepared to accept. Several key dynamics shape this: • Seller motivation: Why would a business owner sell at 3x EBITDA if they could achieve a similar return by continuing to operate the business over three years (pre-tax and CapEx)? Some just want to retire or can no longer take the pressure of increased compliance in their sector. • Financing constraints: For buyers, securing leverage is challenging below £1m EBITDA, where cashflow lending appetite is low. Even between £2m–£3m EBITDA, lenders may only finance 2.0x–2.5x EBITDA. The lower end is not appealing to more sophisticated investors as they want to deploy £10m+. Observed Market Multiples Based on my experience — primarily in asset-light service businesses, including the acquisition of 16 estate and letting agents over the last decade and my search over the last year — the following valuation ranges serve as useful benchmarks: • EBITDA <£1m: 3.0x–4.0x • £1m–£2m EBITDA: 4.0x–5.0x • £2m–£3m EBITDA: 5.0x–6.0x • £3m+ EBITDA: 6.0x+ However, where a specific business falls within these ranges depends on several factors: 1. Quality of Earnings • Is revenue transactional or recurring? • Estate agencies (transactional revenue, agent-dependent) may transact at 2.0x EBITDA at the £500k level due to limited buyer demand. • In contrast, letting agencies with contracted recurring revenue may attract 4.0x–5.0x EBITDA at the same size. 2. Growth Profile • Has the business delivered sustainable growth (e.g., 10%+ p.a.)? • Is there a credible pathway to future growth through market fragmentation or rising demand? 3. Post-Sale Stability • Will key employees critical to customer relationships remain post-transaction? 4. Sector Demand • Some sectors attract significant buyer interest, particularly from private equity-backed consolidators (e.g., accountants, vets, dentists, SaaS businesses). • These businesses can achieve 6.0x EBITDA at the £500k–£1m EBITDA level. Personal Valuation Parameters My acquisition strategy is shaped by conservative valuation principles. I target opportunities where: • Under £1m EBITDA: <4.0x • £1m–£1.5m EBITDA: 4.0x–5.0x My current search is focused on businesses generating £750k–£1.5m EBITDA, and thus my metrics are calibrated for this range. As an evergreen investor, my primary goal is to build sustainable long-term cash flows, not necessarily to target an exit within 4–8 years. However, exit scenarios still inform investment discipline: • Example: Acquiring a business at £1.25m EBITDA for 4.0x (£5m enterprise value), growing EBITDA at 10% annually, and exiting at 5.0x (£2m EBITDA after five years) could generate an estimated 40% IRR. • Of this 40% IRR, 25% is attributable to cumulative cashflows during the hold period — effectively 70% of EBITDA after accounting for 25% corporation tax and 5% CapEx assumptions. Therefore, my priority is identifying sustainable cashflow generating businesses. • This analysis does not factor in the potential to enhance returns through debt financing. There are far better informed people on this platform, but this is my simplistic approach and understanding. As mentioned by others Mark to market is a very helpful starting point.

This is awesome. Thanks for the insight ^redacted‌. Yes, I have come to the realization that the preferred and final multiple varies on several factors. Each to their own benchmarks and deal thesis.