Lenders value a business on the profit it can reliably make and turn into cash, not on the asking price. Most use adjusted earnings, often EBITDA, and lend an amount the business can comfortably repay from them.
How the profit is adjusted
The seller's accounts are adjusted to show the business as it will run under you:
- Addbacks: costs that won't continue, such as the owner's personal expenses or a one-off legal bill, are added back.
- New costs: anything you'll need to pay that the owner didn't, such as a manager's salary to replace the owner's unpaid work, is taken off.
- One-offs removed: unusual income or costs that won't repeat.
Lenders only accept addbacks that are well evidenced.
What else affects the value
- how steady and predictable the profits are
- how much depends on a few customers, or on the owner personally
- the sector, and the assets the business owns
If the price is more than lenders will fund
The gap has to come from somewhere: more of your own money, more vendor finance, or a lower price. A lender's view is a useful reality check in negotiations. See How much will a lender lend to buy a business?.
Get a valuation view early
Your accountant can help you test the price before you agree it.
Last reviewed: 8 October 2026