Rule of thumb valuation calculator (UK, 2026)
Pick your sector — accountancy, SaaS, FBA, pub, café, dental, care home, nursery, MSP, manufacturer, agency. Enter the sector-specific metric (gross fees, ARR, SDE, beds, places, EBITDA) and we return the industry rule-of-thumb range with the reasoning applied. Directional only — always cross-check with EBITDA multiple and DCF.
By Chris at Sell LtdLast updated - 12 UK SME sectors with published sector heuristics.
- Each uses the metric the market actually talks in — not a one-size-fits-all EBITDA multiplier.
- Best used as a fast sanity check before running the full valuation model.
Where each rule of thumb comes from
A good rule of thumb converges toward EBITDA-multiple math at typical sector margins. For accountancy, 1× gross recurring fees at 30% net margin gives roughly 3× EBITDA — exactly what the sector trades at. For MSPs, 6–9× EBITDA on 80% recurring revenue matches 1.2–1.8× total recurring revenue. When the rule of thumb and the EBITDA multiple materially diverge, the business is a rule-of-thumb outlier — usually because one of the levers (concentration, margin, recurring share) is off market.
When rules of thumb break — three real examples
Pubs. "1× fair maintainable trade + freehold" fails for tied-house leaseholds where trade is depressed by a brewery agreement. Restructure the tie analysis before applying the rule.
Care homes. "£60–130k per bed" hides a 3× spread. CQC "Outstanding" with 95%+ occupancy hits the top of the range; "Requires improvement" with 70% occupancy hits the bottom. Bed count without regulatory status and occupancy is meaningless.
Amazon FBA. "2–4× SDE" collapses if a single ASIN generates > 60% of revenue, or if the brand is unregistered. In those cases the rule of thumb overstates value 40–60% versus what informed buyers actually pay.
Using a rule of thumb inside a negotiation
Sellers love rules of thumb because they're simple. Buyers use them as an anchor and then chip below. If you enter a negotiation with only a rule-of-thumb number, expect to lose 15–25% on the way to LOI. Enter with a defensible EBITDA-multiple range plus a rule-of-thumb sanity check and a DCF back-up, and you hold your price.
How Chris uses these in your valuation memo
Every Sell Ltd Information Memorandum includes a valuation-defence memo that runs three methods — EBITDA multiple, SDE (if owner-operator) or DCF (if scaled), and the sector rule of thumb — then triangulates them into a range and an asking price. The rule of thumb is never the primary number; it's the sanity check that reassures buyers the price sits inside sector norms.
Frequently asked questions
What is a valuation rule of thumb and when is it useful?
A rule of thumb is a sector-specific heuristic — 1× gross recurring fees for accountancy, 2×–4× SDE for Amazon FBA, £60–£130k per bed for care homes. It's how buyers and brokers talk quickly. It's useful for sanity-checks and pub conversations, but never as a stand-alone valuation.
Are rules of thumb accurate?
As a directional starting point, yes — they align with market averages within about 20%. As a precise valuation, no. Rules of thumb ignore concentration, growth, margin, contract quality and owner dependency, all of which move real prices materially.
Which rule of thumb should I trust?
The one for your specific sector and size. A £/bed rule for care homes doesn't apply to pubs. An ARR multiple for SaaS doesn't apply to project-based agencies. Match the metric to the business model.
How do rules of thumb compare with EBITDA multiples?
For most sectors they roughly reconcile — 1× gross fees for accountancy typically implies about 3× EBITDA at ~30% margin. When the two diverge sharply, one of the inputs is wrong. Test both.
Do brokers use rules of thumb to value businesses?
Yes — informally, in the first conversation. Formal broker valuations use adjusted EBITDA × sector multiple, backed by market comparables. Watch out for a broker who quotes a big number on rule-of-thumb alone: it's usually a listing hook, not a defensible valuation.
Get a fully-drafted, buyer-ready valuation with Chris
Start the free seller survey. Chris (AI deal adviser at Sell Ltd) drafts your Information Memorandum, blended valuation range and confidential listing in about 20 minutes — you edit, publish or keep private. No retainer, no exclusivity.