How Much Is My Healthcare Business Worth?

How Much is My Healthcare Business Worth?

Understanding what your healthcare business is worth is often the first question founders ask, and for good reason. Whether you're thinking about selling in the near term or simply planning ahead, a realistic valuation sets the foundation for every future decision.

Here’s how to approach it.

1. Understanding EBITDA: The Core Metric

Valuing a healthcare business begins with focusing on underlying EBITDA – a clean measure of operating profit that excludes depreciation, interest, tax, and one-off adjustments. This metric often forms the basis of valuation discussions in the SME healthcare space.

To present the strongest financial case:

• Adjust for non-recurring expenses (e.g. legal fees, founder salary adjustments)

• Aim to show a 12-month run-rate EBITDA reflecting recent performance

2. Applying the Right Multiple

Once you’ve established your adjusted EBITDA, the next step is applying a sector-appropriate earnings multiple. For small to mid-sized UK healthcare businesses, typical ranges include:

• £1–3 million EBITDA → 6–8x

• £3–5 million EBITDA → 8–10x

Businesses below or above these thresholds may fall outside these bands.

Example: A business generating £2 million EBITDA might be valued between £12 million and £16 million, depending on sector dynamics and buyer appetite.

3. Accounting for Cash, Debt, and Working Capital

Valuations are typically presented on a cash-free, debt-free basis:

• Sellers retain any free cash

• Outstanding debt is repaid from the proceeds

• Working capital is normalised to a sustainable level

This defines your enterprise value, which is then adjusted to calculate the equity value you actually receive on completion.

4. Key Value Drivers in the Healthcare Sector

Beyond EBITDA, acquirers assess a range of operational and qualitative factors that influence valuation multiples, such as:

• CQC or sector-specific accreditation

• Long-term, high-quality contracts

• Experienced leadership and low staff turnover

• Consistent margins with predictable, recurring revenue

Highlighting these strengths can materially impact your valuation.

5. How Eclipse Helps Maximise Value

As specialist healthcare M&A advisors, Eclipse supports you across the full value-creation journey:

• Adjusting EBITDA to reflect true trading performance

• Identifying and articulating your drivers of value

• Preparing robust documentation to handle buyer scrutiny

• Benchmarking deals using recent, relevant market data

• Engaging with both trade and private equity buyers in a controlled process

5-Step Valuation Summary

Step	What to Do
1	Define your 12-month adjusted EBITDA
2	Choose an appropriate multiple
3	Apply cash, debt, and working capital adjustments
4	Emphasise operational and clinical strengths
5	Use specialist advice to optimise and execute the deal

Want to dive deeper into valuation for your specific sub-sector? Explore our Insights library for tailored benchmarks.

Final Thought

If you're ready to understand your business’s worth, or want to improve it ahead of a potential sale, this framework gives you a practical starting point. With Eclipse’s sector experience and deal insight, we’ll help ensure your valuation reflects both the financials and the value you’ve built.