A business valuation report is a written opinion of what a company, or a shareholding in it, is worth at a stated date, for a stated purpose and on a stated basis of value, together with the evidence, methods and assumptions that produce the figure. A good one lets a reader who was not in the room, such as a buyer, a judge, HMRC or the other side of a dispute, follow the number from the accounts to the conclusion and see which assumptions it depends on. Under the International Valuation Standards, that means stating the scope, the basis of value, the valuation date, the information relied on, the approaches and methods used and why, how the results were reconciled, and the assumptions and limitations behind them.
Last reviewed: October 2026. Written for owners of UK private companies. Valuation references are to the International Valuation Standards (IVS) published by the International Valuation Standards Council (IVSC), 2025 edition, and to the RICS Red Book for RICS members. General information, not valuation, tax or legal advice. All figures are illustrative.
This guide is for owners and finance directors of UK businesses turning over roughly £1m to £100m who have been told they need "a proper valuation": for a sale or a management buyout, a shareholder leaving, a divorce, an HMRC filing or a funding round. It covers the document: what a complete report contains, when it needs to be independent, and how to read one critically. How the figure itself is built, method by method, is in our guide to how to value a business.
This page is about the valuation of a whole business or a shareholding in it. Individual intangible assets, such as a brand, a customer base or a piece of software, can be valued in their own right, and that report is different in scope and method: see our guide to intangible asset valuation reports and the FAQ on what an intangible asset valuation report contains.
A valuation is a figure; a valuation report is the document that makes the figure usable by someone else. The same £4.6m means little on its own. In a report, it is the market value of 100% of the shares at 31 March, on a going concern basis, reached by an earnings multiple and cross-checked by a discounted cash flow, and the reader can see every step.
A business valuation report sets out a valuer's conclusion of the value of a business or business interest, the basis of value and valuation date it applies to, the work done, the information relied on, the approaches and methods used, and the assumptions and limitations that apply. The International Valuation Standards set the reporting requirements in IVS 106, and the standard for businesses and business interests is IVS 200.
Owners often hold documents with a number in them that are not valuation reports. Knowing the difference matters, because each was written for a different reader and a different purpose.
| Document | Who prepares it | What it is for | Why it is not a valuation report |
|---|---|---|---|
| Broker's or adviser's appraisal | A business broker or corporate finance adviser pitching to sell your business | The asking price and the achievable price in a sale | Usually a market view to win or run a sale, often with a fee tied to the price, so not independent |
| Indicative or calculation valuation | An accountant or valuer, on limited procedures | An early view, internal planning | Limited work and limited reliance; usually not suitable where a third party will rely on it |
| Quality of earnings report | A transaction services team | Testing whether earnings are real and recurring | Tests the earnings, not the value; it gives no opinion on what the business is worth |
| Fairness opinion | An investment bank or adviser | Telling a board whether a price is fair from a financial point of view | Answers whether a price is fair, not what the business is worth |
| Expert witness report | An independent expert instructed in litigation | Evidence to a court or tribunal | A form of valuation report with additional duties to the court, covered below |
A valuation report is only as useful as its fit with the question being asked. A figure prepared to market a business, to test its earnings or to reassure a board is not a figure a court, HMRC or a departing shareholder will accept as a valuation.
The International Valuation Standards set out what the valuer must agree before the work starts (IVS 101, scope of work) and what the report must communicate (IVS 106). RICS members also follow the RICS Red Book, which builds on IVS and adds its own requirements. The length of a report scales with its purpose: a valuation for a shareholder buy-back may run to a dozen pages, one for a contested dispute to many more. The core does not change.
| Section | What it should state | What to check |
|---|---|---|
| Scope and purpose | Who instructed the valuer, why the valuation is needed, the intended users | That the purpose matches your use; a report for one purpose may not be relied on for another |
| Subject and interest valued | The company, and whether the value is of the whole business, 100% of the shares or a specific holding and class of share | A 10% holding is not worth 10% of the company |
| Basis of value | Market value, investment value, fair value or another basis, with its definition | That the basis is the one your purpose requires |
| Premise and level of value | Going concern or liquidation; controlling or minority; marketable or not | Any discount or premium, and why it applies |
| Valuation date | The single date the value applies to, and the report date | Events after the valuation date that were or were not taken into account |
| Information relied on | Accounts, management accounts, forecasts, interviews, market data, and what was and was not verified | Whether the forecast is management's, the valuer's or adjusted, and who stands behind it |
| Business and market overview | What the business does, its customers, people, assets and market | That it describes your business, not a generic one |
| Approaches considered | Market, income and cost, which were used and why the others were rejected | A reason for each choice, not just a list |
| Methods used | The method within each approach, such as an earnings multiple or a discounted cash flow | That the method suits the business: earnings for a profitable trader, assets for a holding company |
| Normalisation adjustments | Each adjustment to reported earnings, its amount and the evidence for it | Every adjustment, in both directions, with documents behind it |
| Multiple or discount rate | Where the multiple or discount rate came from: comparables, transactions, a risk build-up | The comparables named, and each premium or discount explained |
| Enterprise to equity bridge | Debt, surplus cash, working capital and debt-like items | Items you would argue about in a sale, treated consistently |
| Reconciliation and conclusion | How the results of different methods were weighed, and the concluded value or range | An explanation of any gap, not an average that hides it |
| Sensitivities | How the value changes with the key assumptions | Which assumption moves the value most |
| Assumptions and limiting conditions | General and special assumptions, restrictions on use, liability limits | Any special assumption that changes what is being valued |
| Valuer statement | The valuer's status, independence, qualifications, the standards followed, and a signature | Any previous involvement with the business, disclosed |
The first pages should tell you what question the report answers. A valuation of 100% of a company for a sale, of a 25% holding for a shareholder buy-out and of the same holding for inheritance tax can produce three different figures from the same accounts, and all three can be right. The scope also records who may rely on the report. A report prepared for the company's board is not addressed to a buyer or a bank, and the engagement terms usually say so.
The basis of value is the precise question the valuer is answering. Under the 2025 edition of IVS the bases are set out in IVS 102. US practice calls the same idea the "standard of value". Two further choices sit alongside it: the premise of value, usually a going concern for a trading business, and the level of value, which is whether the interest carries control and whether it can readily be sold.
| Basis | The question it answers | Where you meet it |
|---|---|---|
| Market value (IVS) | What a willing buyer and a willing seller, acting knowledgeably and without compulsion, would agree at arm's length after proper marketing | Most sale, lending and general-purpose valuations |
| Investment value, or worth (IVS) | What the business is worth to a particular owner or buyer, with its own plans and benefits | A specific buyer's view, or an owner's decision whether to sell |
| Equitable value (IVS) | A price that is fair between two identified parties, reflecting what each gains or loses | Some shareholder agreements and negotiated transfers |
| Synergistic value (IVS) | The value of two or more interests combined, where it exceeds their separate values | A buyer that can merge the business with its own |
| Liquidation value (IVS) | What the assets would realise if sold piecemeal, orderly or forced | Insolvency, lending against assets, a business that cannot continue |
| Fair value for financial reporting | An exit price between market participants under IFRS 13, with FRS 102 alongside in the UK | Accounts, purchase price allocation, impairment testing, fund valuations |
| "Fair value" under the articles or a court order | Whatever the articles, shareholders' agreement or court defines it to mean | Leaver provisions, compulsory transfers, unfair prejudice orders |
| Market value for tax | A hypothetical open-market sale, under tax rules and case law | Capital gains tax, inheritance tax, employee share schemes |
The last two rows are where reports most often go wrong. "Fair value" in a company's articles is not the IFRS 13 definition, and a minority holding valued for tax is not a pro rata share of the whole. Whether a minority discount or a discount for lack of marketability applies depends on the basis, the documents and, in a dispute, the court. A report should state which applies and why.
Check the basis of value before you read the number. A correct valuation on the wrong basis is the wrong answer, and a report prepared on market value for a sale will not usually serve for a leaver valuation under your articles, or for HMRC.
Every figure in a report is at one valuation date. Events after that date are generally reflected only if they were known, or knowable with reasonable due diligence, at that date, although tax rules and the courts have their own approaches, and the report should say how it treated anything that happened in between. The information section lists what the valuer used, and, just as important, what it did not verify. Most business valuations rely on management's forecast without auditing it; the report should say so, and should say whether the valuer adjusted the forecast and why.
IVS 103 sets out three valuation approaches: the market approach, the income approach and the cost approach. For a business, the cost approach is usually applied as an adjusted net asset method, which is why our how to value a business guide calls it the asset approach. A report should say which approaches it used, which it considered and rejected, and why. For a profitable trading business, a typical report applies an earnings multiple as the primary method, cross-checks it with a discounted cash flow, and sets the adjusted net assets as a floor.
Most of the argument about a private company's value is about its earnings, not its multiple. A report should list every adjustment from reported to normalised earnings: owner's pay restated to market, one-off costs removed, related-party rent re-based, and the adjustments that reduce earnings as well as those that increase them. Our guide to normalised EBITDA sets out each adjustment and a full EBITDA bridge, and a buyer's quality of earnings review will test each one against evidence.
This is the section that most often decides whether a report is credible. "We have applied a multiple of 5.0x" is an assertion. A report should show where the multiple came from: named comparable companies or transactions, how they differ from your business in size, growth and risk, and the adjustment made for each difference. For a discounted cash flow, it should show how the discount rate was built up, including any premium for company-specific risk such as owner dependency or customer concentration, and the evidence for it. The FAQ on choosing a valuation multiple explains the main multiples.
Two reports value the same business at 5.0x and 6.0x normalised EBITDA. The first names five comparable transactions and deducts a turn for customer concentration, with the revenue analysis in an appendix. The second cites "market multiples for the sector". On £1.0m of earnings the gap is £1.0m, and only one of the reports lets a reader decide which figure to believe.
When two methods give different results, the reconciliation explains why and states how the valuer reached a conclusion, as a point or a range. Sensitivity analysis then shows how far the value moves when the main assumptions change. The assumptions section lists the general assumptions (for example, that the information supplied is accurate) and any special assumptions, which are facts the valuer has been told to assume that differ from reality at the valuation date, such as a contract being renewed. A special assumption changes what is being valued, so it should be prominent, not buried in an appendix.
The report should end with a statement of who the valuer is, what qualifies them, whether they are independent of the business and the parties, any previous involvement with the business, and the standards the report complies with. RICS members working under the RICS Red Book must disclose their status and any material involvement. Our comparison of IVS 210 and the RICS Red Book shows how the two frameworks fit together in a lending context.
Take the illustrative UK services business from our how to value a business guide: normalised EBITDA of £1.0m, borrowings of £0.8m, surplus cash of £0.3m, adjusted net assets of £1.5m, and a five-year forecast of free cash flow from £600,000 to £750,000. Here is how the closing pages of a report on 100% of its shares, at market value on a going concern basis, would present the result.
| Method | Role in the report | Key input | Equity value |
|---|---|---|---|
| Earnings multiple | Primary method | 5.0x normalised EBITDA of £1.0m, less £0.5m net debt | £4.50m |
| Discounted cash flow | Cross-check | 15% discount rate, 2% long-term growth, less £0.5m net debt | £4.66m |
| Adjusted net asset value | Floor | Net assets of £1.2m plus £0.3m property uplift | £1.50m |
| Concluded range | The multiple and the DCF agree within about 4% | £4.5m–£4.7m |
| Assumption | Low | Base | High |
|---|---|---|---|
| EBITDA multiple (4.5x / 5.0x / 5.5x) | £4.00m | £4.50m | £5.00m |
| DCF discount rate (17% / 15% / 13%) | £3.96m | £4.66m | £5.63m |
Three things in these pages tell a reader the report is doing its job. The methods agree, and the report says by how much. The sensitivity table shows that two percentage points on the discount rate moves the value by more than either change in the multiple, so the risk assessment behind the rate deserves the closest reading. And the asset floor, £3.0m below the concluded range, shows how much of the value depends on things the balance sheet does not record.
Read a valuation report from the back. The reconciliation tells you how confident the valuer is; the sensitivities tell you which assumption to challenge; the assumptions tell you what the figure is not.
An independent business valuation is one prepared by a valuer who has no interest in the outcome: not paid by results, not acting for one side in the transaction, and free of any relationship with the business that would compromise their objectivity. Not every situation needs one. A sale is usually priced by negotiation, and a buyer will form its own view whatever you show it. Where a figure has to be accepted by someone who did not choose it, such as a court, HMRC or a departing shareholder, independence is usually what makes it acceptable.
| Situation | Who usually asks for it | Basis usually used | What the report has to withstand |
|---|---|---|---|
| Sale to a third party | Rarely required; sometimes the board or minority shareholders | Market value | The buyer's own diligence; a report sets expectations, the market sets the price |
| Management buyout | Selling shareholders or the board, because management are buyers with inside knowledge | Market value | A conflict of interest: the buyers know the business better than the sellers |
| Shareholder leaving or in dispute | The articles or shareholders' agreement, an expert determination, or a court | "Fair value" as the documents define it, or market value | The other party's expert; in an unfair prejudice petition under section 994 of the Companies Act 2006, the court |
| Divorce | The court, often through a single joint expert instructed by both parties | Usually market value, on the facts of the case | Challenge from either party's advisers |
| HMRC: share schemes, capital gains tax, inheritance tax | The company or its tax adviser, for a return or a scheme | Market value under the tax rules | Review by HMRC's Shares and Assets Valuation team |
| Fundraising | Rarely required; the round is priced by negotiation | Negotiated price; investing funds later report the holding at fair value | The lead investor's view of the pre-money valuation |
In litigation, the report becomes evidence and the valuer becomes an expert witness. In England and Wales, Part 35 of the Civil Procedure Rules makes the expert's overriding duty one to the court, not to the party paying the fee, and the report has to comply with the court's requirements for expert evidence. Our FAQ on expert witnesses in valuation disputes covers the role.
For tax, the relevant value is generally market value on a hypothetical open-market sale, and HMRC's Shares and Assets Valuation team may review valuations used for tax purposes, including for capital gains tax, inheritance tax and employee share schemes. The processes HMRC offers for checking or agreeing some of these valuations are described in our guide to how to value a business. This is general information, not tax advice: take advice from a UK tax adviser before relying on any valuation for tax.
In the UK there is no single licence for valuing a business, so the valuer's qualifications, experience and standards matter. Business valuations are commonly prepared by chartered accountants, including members of the ICAEW, with corporate finance or valuation experience; by valuation specialists, some of whom hold the CFA charter; and by RICS Registered Valuers, who work to the Red Book. For a dispute, choose a valuer with expert witness experience; for HMRC, one who prepares tax valuations regularly.
Cost and timing vary widely with the purpose, the size and complexity of the business, the number of entities, the state of the records and whether the report must stand up in court. Ask two or three valuers to quote against the same written scope, and ask what the fee covers if the report is challenged. Our FAQ on the cost to sell a business puts valuation and diligence among the other costs of a sale.
Why you need the valuation, whether it is the whole business or a holding, and which basis of value the purpose requires. Check your articles and shareholders' agreement first.
Qualifications, experience of the purpose (sale, dispute, tax), independence from you and the other parties, and the standards they will follow.
The scope, valuation date, basis of value, intended users, reliance, fee and timetable, in writing, before work starts.
Three years of accounts, current management accounts, a forecast you can defend, and the evidence for every normalisation adjustment.
Correct factual errors in the draft. Pressing an independent valuer to change the conclusion undermines the report's independence.
A report for one purpose, date or basis may not serve another. Ask the valuer before relying on it elsewhere.
The multiple and the discount rate are where a valuer prices risk, and most of that risk sits in assets the balance sheet does not record. In the worked example, £3.0m of the £4.5m equity value sits above the net assets. The report's derivation section is where that gap is explained, and the explanation is only as strong as the evidence behind it.
| Report section | The question behind it | Evidence that answers it |
|---|---|---|
| Normalisation adjustments | Will these earnings continue under a new owner? | Contracts, renewal history, documents for each adjustment |
| Multiple derivation | Is this business better or worse than the comparables? | Revenue quality, customer relationships, brand strength, systems |
| Company-specific risk premium | How dependent is the business on the owner or a few customers? | Who holds each key relationship, documented processes, customer concentration |
| Forecast and DCF | Are the growth assumptions supported? | Pipeline, retention data, ownership of the technology and know-how that deliver growth |
| Reconciliation | Why is the earnings value well above net assets? | A register of the intangible assets that produce the earnings, with evidence for each |
A valuer can only reflect what can be evidenced. An owner who arrives with the contracts, retention data and relationship maps already organised gives the valuer something to cite in the derivation section, rather than a judgement to defend.
In Opagio Intangibles, the Opagio Value Drivers Register™ records your intangible assets across Opagio 12, with the supporting evidence attached to each one. The Normalised P&L holds every earnings adjustment with its direction, amount, period, narrative and linked documents. The Asset Valuator values individual intangible assets with recognised asset-level methods, such as relief from royalty and the multi-period excess earnings method, and reports on them. Opagio does not prepare independent business valuations or business valuation reports, and it does not replace a valuer; it organises the evidence an independent valuer, a buyer or HMRC will look for. See how Opagio prepares a business for sale.
A valuation report starts from the statutory accounts and the management accounts that reconcile to them. Any figure you give a valuer should say which set it belongs to.
Opagio keeps three sets of figures separate and never mixes them. Reported is the accounts as filed: the fact, and the starting point of every valuation report. Accounting-eligible shows what the accounting standards would let the accounts show. Management is a non-statutory model, useful for running the business and for explaining where value sits, but never presented as reportable or auditable, and never as the earnings a valuer should apply a multiple to.
A business valuation report is a written opinion of the value of a business or a shareholding in it at a stated date, for a stated purpose and on a stated basis of value. It sets out the information relied on, the approaches and methods used, the reconciliation of their results, the sensitivities and the assumptions, so a reader can follow and test the conclusion.
At minimum: the scope and purpose, the interest valued, the basis and premise of value, the valuation date, the information relied on, the approaches and methods used and why, the normalisation adjustments, how the multiple or discount rate was derived, the bridge to equity value, the reconciliation and conclusion, sensitivities, assumptions and limiting conditions, and a statement of the valuer's independence, qualifications and the standards followed.
An independent business valuation is prepared by a valuer with no interest in the outcome: not paid on results, not acting for one side, and with no relationship with the business that would compromise their objectivity. It is usually needed when a figure must be accepted by someone who did not choose it, such as a court, HMRC or a departing shareholder.
It varies widely with the purpose, the size and complexity of the business, the state of the records and whether the report must withstand a dispute. A short report for a simple shareholder transfer costs far less than an expert report for litigation. Ask several valuers to quote against the same written scope.
There is no single licence for valuing a business in the UK. Reports are commonly prepared by chartered accountants with valuation or corporate finance experience, by valuation specialists, some holding the CFA charter, and by RICS Registered Valuers working to the Red Book. Choose a valuer whose experience matches the purpose and who is independent of the parties.
HMRC's Shares and Assets Valuation team may review valuations used for tax purposes and can disagree with them. A report prepared on the correct basis for tax, by a valuer experienced in tax valuations, with its evidence and reasoning set out, is better placed to withstand that review. Take advice from a UK tax adviser.
No. A report on market value estimates what a hypothetical buyer would pay; an actual buyer pays what it negotiates, based on its own diligence, its plans and the competition for the deal. Our guide to how much is my business worth covers the buyer's view of the multiple.
A business valuation report is only as good as its fit with the question being asked and the evidence it can cite. Settle the purpose and basis of value first, choose a valuer independent of the outcome, and prepare the evidence for the earnings and the intangible assets behind them before the valuer asks.
If you are preparing to sell, start with the sell-your-business hub, how to value a business for the methods, and vendor due diligence for the reports buyers will read alongside yours. To see where your business stands across the Opagio 12 drivers, take the free Quick Assessment, which gives no £ figure and is not a valuation, or see how Opagio supports an exit. Related reading: our glossary entries on enterprise value, equity value and fair market value, and our guide to business exit strategies.
Tony Hillier is Chairman of Opagio with 30 years of experience in structured finance, M&A advisory, and asset valuation, including executive board roles at NM Rothschild & Sons and GEC Finance. Meet the team.
Buyers price your business through its intangible assets. The owners who defend the multiple build the evidence before going to market.
A 20-second read — would your business survive diligence today?
Eight ways to exit a UK owner-managed business, compared on price, speed, certainty, control and tax: trade sale, private equity, MBO, MBI, employee ownership trust, IPO, family succession and an orderly wind-down.
Read more →
Your business is worth a multiple of its normalised earnings, and a buyer sets that multiple on assets your balance sheet never shows. Here is how the number is built, and how to move it before you sell.
Read more →
Normalised EBITDA is the profit a buyer multiplies. Here is every common adjustment and which way it goes, the 2026 FRS 102 lease change, and a worked EBITDA bridge from £1.5m reported to £1.2m normalised.
Read more →Get the latest insights on intangible asset growth and productivity delivered to your inbox.