Adjusted EBITDA calculator for UK business owners
Work out the profit figure a buyer will actually apply a multiple to. Most calculators get the owner salary part wrong, which is the adjustment that matters most and the one buyers argue about hardest.
Start with profit
Take these from your statutory accounts or your management figures. Use the most recent full year.
Owner remuneration
The one everybody gets wrong. A buyer still has to pay someone to do your job, so only the amount above a market rate replacement is an add back. Include employer’s NI and pension on both sides.
Personal costs in the business
Things a new owner simply would not spend. Only include what you could evidence if asked, because every one of these gets tested.
One off costs
Genuinely will not happen again. A cost that has appeared three years running is not a one off, however unusual it felt each time.
Related party arrangements
Where you are on both sides of a transaction. Only the difference from a market rate counts, and it can go either way.
What buyers take off
The section other calculators leave out. Buyers adjust downwards too, and finding these yourself is far better than having them found in diligence.
Your adjusted EBITDA
Updates as you type. Nothing is sent anywhere and nothing is stored.
What the adjustments are worth, at a range of multiples
Indicative only. Every add back has to be evidenced, and a buyer will test each one. This is not accounting or tax advice.
What buyers accept, and what they throw out.
Add back disputes are one of the most common reasons a deal gets repriced after heads of terms are agreed. The difference is almost always evidence rather than the size of the number.
Usually accepted
- Owner pay above a market rate replacement
- Personal vehicles, travel and subscriptions
- Family wages above the going rate, the excess only
- Legal fees on a dispute that is now settled
- Redundancy and settlement payments
- Related party rent above market rate
- A genuine one off project or system implementation
Usually rejected
- Your whole salary, that is SDE, not EBITDA
- Costs that recur every year but feel unusual
- Marketing you chose to stop spending
- Anything with no invoice or ledger entry behind it
- Losses from a division you still operate
- Owner time valued at your own estimate
- Growth you expect but have not yet delivered
Documentation beats size every time. A modest add back with a clear paper trail survives diligence. A large one resting on your word gets removed, and it makes a buyer look harder at everything else on the list.
Small adjustments, large consequences.
Adjusted EBITDA is the number the multiple gets applied to, so every pound of adjustment is multiplied straight into the price.
At a 5x multiple, a £50,000 adjustment is worth £250,000. That is why buyers scrutinise this line so carefully, and why owners who prepare properly do better than owners who argue well on the day.
The owner salary trap. Plenty of online calculators invite you to add back everything you take out of the business. That produces seller’s discretionary earnings, which is a fair measure for a small owner operated business changing hands between individuals. It is not what a trade buyer or a private equity backed group uses. They will appoint someone to run the business, that person costs money, and only the difference is an add back.
Three years, not one. A buyer will look at a run of accounts, not your best year. If an add back only appears once across three years, expect questions. If the same one off appears in all three, expect it to be refused.
Find the downward ones yourself. Unpaid family labour, a property you let the business use for nothing, deferred maintenance that a new owner would have to fund. Presenting these before a buyer finds them protects your credibility on everything else. Having them discovered in diligence is how a price gets renegotiated.
Adjusted EBITDA, answered.
What is the difference between EBITDA and adjusted EBITDA?
EBITDA is operating profit with depreciation and amortisation added back. Adjusted EBITDA goes a step further and normalises the figure, stripping out costs a new owner would not carry and adding in costs they would. It is meant to answer one question: what does this business really earn, run at arm’s length, without the current owner’s arrangements.
Can I add back my whole salary?
Not for EBITDA. A buyer has to replace you, and that costs money. Only the amount you take above what a market rate managing director would cost is an add back. Adding back the whole lot gives you seller’s discretionary earnings, which is used for smaller owner operated businesses but not by trade buyers or private equity.
What counts as a genuine one off?
Something that will not happen again under a new owner, and that you can evidence. A settled legal dispute, a redundancy round, a one time system implementation. If a similar cost appears in two of the last three years, a buyer will treat it as part of normal trading no matter what it was for.
I own the building the business trades from. How is that treated?
If the company pays you above market rent, the excess is added back. If it pays nothing or below market, a buyer will deduct a realistic rent instead, because the new owner will have to pay it. This catches owners out regularly and the effect is large once a multiple is applied.
Will a buyer just accept my figures?
No. Every add back gets tested, usually through a quality of earnings review or the buyer’s accountants working through the ledger. Add back disputes are one of the most common reasons a price gets renegotiated after heads of terms. The defence is documentation, not argument.
Does this calculator store anything?
No. It runs entirely in your browser. Nothing is sent to us, nothing is saved, and there is no form to fill in. Close the tab and it is gone.
So what multiple applies to you?
Adjusted EBITDA is half the sum. The other half is the multiple, and that depends on your contracts, your customers and how much of the business depends on you. Our business valuation calculator will put a range on it, the multiples by sector page shows where your industry typically lands, and after that it needs a conversation rather than a tool.
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