Practice Valuation Calculator

Valuations based purely on gross recurring revenue multiples (e.g., 3x-4x) are increasingly outdated due to rising regulatory costs. Private equity consolidators evaluate independent practices on adjusted EBITDA. Use this tool to calculate both metrics.

Industry Benchmark

Target EBITDA Margin for a mature practice is 28% to 35%.

Firm Financials

Non-recurring revenue attracts a much lower multiple.

Include staff, premises, PI, FCA fees, tech. Exclude principal drawings.

What would it cost to hire an adviser to replace the owner's revenue production?

Valuation Estimates

Traditional Multiple (Revenue)

Based on 3.5x recurring + 1.0x initial fees.

Private Equity Model (EBITDA)

Based on adjusted EBITDA × 6.5x multiple.

Adjusted EBITDA
EBITDA Margin

Warning: Your EBITDA margin is below 20%. Consolidators will heavily discount the multiple as the practice is operationally inefficient. Focus on repricing clients or improving tech integration before seeking a sale.

Your practice operates at an average margin. A sale is viable, but optimizing staff ratios could push you into a premium multiple tier (7x+ EBITDA).

Strong Performance: Your practice generates premium margins. You should demand a higher multiple (7x-9x) from acquirers due to the operational efficiency of the business.

Understanding the Valuation Metrics

The UK advice market has seen a rapid shift in how independent practices are valued. The traditional "recurring revenue multiple" is largely a vanity metric promoted by brokers. True enterprise value is dictated by the cash flow (EBITDA) the practice generates after the principal owner has been replaced.

Why Owner Replacement Cost Matters

Many solo or dual-partner practices report artificially high profits because the owners extract profit rather than paying themselves a commercial salary for the advice they deliver. When a consolidator acquires the firm, they must hire advisers to service those clients. The "Adjusted EBITDA" subtracts this notional replacement cost.

The Danger of Initial Fees

Project fees, initial advice fees, and one-off implementation charges do not roll over. Acquirers view this revenue as highly volatile. While recurring revenue might command a 3.5x to 4x multiple (or 6x-8x EBITDA), initial fees rarely command more than 1x revenue. Firms reliant on initial fees for profitability will suffer severe valuation penalties during due diligence.

Next Steps Before Sale

If your EBITDA margin is below 25%, do not seek a sale. You are leaving money on the table. Spend 12 to 24 months standardising your investment proposition (see CIP Governance) and removing bespoke, time-consuming service models that drain capacity.