Methodology
Twelve valuation methods, three recognised approaches
Every Utopia Value report runs the full set, then risk-weights the results into a single defensible range with the workings shown.
Income approach
Discounted cash flow (DCF)
Forecasts five years of free cash flow plus a terminal value and discounts them at a build-up rate reflecting size, owner dependence and forecast risk.
Capitalisation of earnings
Divides maintainable earnings by a capitalisation rate. Suited to stable businesses where next year looks much like last year.
Excess earnings (Treasury method)
Splits value between a fair return on tangible assets and capitalised goodwill, showing exactly what you pay for intangibles.
First Chicago method
Weights downside, base and upside scenarios by probability. Useful where earnings are volatile or growth is uncertain.
Market approach
EBITDA multiple
Applies an industry benchmark multiple to normalised EBITDA, adjusted for size, concentration and revenue quality.
SDE multiple
The standard for owner-operated businesses, applying a multiple to seller's discretionary earnings.
Revenue multiple
A cross-check for businesses with predictable industry margins, converted back to an implied earnings multiple.
Comparable transactions
Benchmarks against completed private transactions in the same industry bracket, adjusted for scale.
Industry rule of thumb
Sector-specific conventions used by brokers, reported as sanity checks rather than conclusions.
Asset approach
Adjusted net asset value
Assets restated to current value less liabilities — the usual floor for a trading business.
Orderly liquidation value
What assets would realise if sold individually over a reasonable period, net of costs.
Replacement cost
The cost of rebuilding the same operating capability today, acting as a ceiling test.
How the methods are weighted
Methods are not averaged blindly. Weighting reflects the business profile: earnings-based methods dominate for profitable trading businesses, asset methods take over where returns fall below a fair return on assets, and SDE-based results carry more weight in owner-operated businesses. Risk factors — owner dependence, customer concentration, trading history and margin trend — then adjust the multiple applied.
Run the methods on my business