A consumer business is almost always valued as a multiple of its adjusted EBITDA, and in the current market that multiple falls between roughly 2x and 8x. Where you land inside that range is driven by size, growth, margin quality, revenue durability, and how dependent the business is on its owner. Everything else about valuation is detail on top of that sentence.
This guide explains how the method works in practice, what genuinely moves the number, and why two businesses with identical revenue can sell for wildly different prices.
The core method: adjusted EBITDA times a multiple
Buyers of established consumer businesses price the profit stream they are acquiring. The starting point is adjusted EBITDA: your operating profit, normalised for owner compensation, one-off costs, and anything that will not exist under new ownership. That figure is then multiplied by a market multiple to give enterprise value.
So the whole exercise reduces to two questions. What is the real, defensible adjusted EBITDA? And what multiple will the market pay for a business with this profile? The first is accounting and evidence. The second is positioning and competition.
What sets the multiple
1. Size
Scale is the single biggest driver. A business with under £1m of adjusted EBITDA typically trades at 2x to 4x, because the buyer pool is smaller and the perceived risk is higher. Between £1m and £5m the range moves to roughly 3.5x to 6x. Above £5m, and especially above £10m, institutional buyers arrive and multiples push toward the top of the envelope.
2. Category
Food and beverage, beauty, and health products tend to price above fashion or agency-model businesses because demand is more repeatable and buyers are more active there. Our multiples guide breaks the ranges down by category.
3. Growth and margin
A business growing 20%+ a year with EBITDA margins above 20% earns a premium. Flat or declining revenue, or margins under 10%, pushes the multiple down fast, because the buyer is underwriting a turnaround rather than a continuation.
4. Revenue durability
Repeat purchase rate, subscription revenue, and a diversified customer base all make the profit stream more predictable, and predictability is what a multiple prices. Heavy dependence on a single customer, a single marketplace, or a single hero product is discounted.
5. Owner dependence
If the founder is the head of sales, the face of the brand, and the holder of every supplier relationship, the buyer is not acquiring a business; they are acquiring a job. Reducing owner dependence in the year before a sale is one of the highest-return moves available.
A worked example
Take a UK food and beverage brand with £8m revenue and £1.6m adjusted EBITDA (a 20% margin), growing 15% a year, selling through retail and DTC, with no customer over 10% of sales.
- Category base for food and beverage: around 5.5x
- Size adjustment for £1.6m EBITDA: roughly minus 1x
- Growth at 15%: plus 0.5x
- Balanced route to market and low concentration: neutral
That puts the indicative multiple near 5x, or roughly £8m of enterprise value, with a realistic range of £6.5m to £9.5m depending on process quality and buyer competition. The same business run as a one-founder operation with 40% of sales from one retailer might struggle to clear 3.5x.
When revenue multiples matter
For low-margin or fast-scaling e-commerce brands, buyers sometimes cross-check with a revenue multiple, typically 0.5x to 1.5x revenue for an online-first consumer brand. If your EBITDA-based value implies more than that, expect buyers to anchor on the lower number. This matters most for businesses running below a 10% margin.
Why the process changes the price
A multiple is not a fact about your business; it is the outcome of a negotiation. One unsolicited buyer negotiating alone will price you at the bottom of your credible range. Several vetted buyers bidding on one timeline routinely move the outcome by 1x to 2x of EBITDA, which on a £2m profit stream is £2m to £4m of price difference. That is the argument for running a structured process rather than responding to an approach.
What is your business actually worth?
Run your numbers through our free valuation tool. Ten questions, an indicative range built on real transaction multiples, and the exact build-up behind it.
Get your free valuation ↗Frequently asked questions
What multiple do consumer businesses sell for?
Most established consumer businesses sell for between 2x and 8x adjusted EBITDA. Sub-£1m profit businesses cluster at 2x to 4x, mid-size businesses at 3.5x to 6x, and larger, growing businesses with quality revenue reach 6x to 8x.
Is valuation based on revenue or profit?
Profit. Adjusted EBITDA is the standard basis for established consumer businesses. Revenue multiples are used mainly as a cross-check for low-margin e-commerce brands, typically at 0.5x to 1.5x of revenue.
What is the fastest way to increase my valuation?
Grow adjusted EBITDA and reduce risk. In practice that means documenting add-backs properly, reducing customer and channel concentration, lifting repeat revenue, and making the business run without the founder. Then sell through a competitive process rather than to a single buyer.
How accurate is an online valuation calculator?
A good calculator gives a defensible indicative range based on category, size, growth, and margin. The precise figure depends on diligence-grade financials and buyer competition, which is why we confirm the number on a call before going to market.