Why Your Accountant's Valuation Is Not What Your Food Business Would Sell For
Your accountant knows your business better than almost anyone. They have filed your accounts for years. They understand your cost structure, your margin profile, your tax position.
But if you have asked your accountant what your food and beverage business is worth - and used that number to make decisions about whether to sell, how to respond to an approach, or how much to invest before an exit - you are likely working with the wrong figure.
This is not a criticism of your accountant. It is a structural limitation of what accountancy training prepares someone to do. Valuing a business for a transaction and preparing accounts for tax and reporting purposes are fundamentally different disciplines. The gap between the two produces a number that is almost always either too low or too high - and rarely useful for making real commercial decisions.
How Accountants Typically Value a Business
The standard approach is straightforward. The accountant takes your most recent year's reported profit - usually EBITDA or PBT (Profit Before Tax) - and applies a sector multiple derived from published benchmarks. For a food manufacturer, they might apply a multiple of 5x or 6x. For a branded food business, perhaps 7x or 8x. The result is presented as an indicative valuation.
This approach is not wrong in principle. It is the same logic that underlies every corporate finance valuation. The problem is in the inputs - specifically in what figure is being multiplied and which multiple is being applied.
The Reported EBITDA Problem
In an owner-managed food and beverage business, the reported EBITDA is almost never the figure a buyer will underwrite. The difference is normalisation.
Normalisation removes the items that are specific to the owner-managed structure of the business rather than its underlying commercial performance. These adjustments are legitimate and accepted in every professional transaction context. They include the founder's salary above what it would cost to hire a market-rate replacement, personal expenses run through the business, family members on the payroll at above-market remuneration, and one-off costs that will not recur.
In practice, the gap between reported EBITDA and normalised EBITDA in an owner-managed food business ranges from tens of thousands to several hundreds of thousands of pounds. Because a multiple is applied to this figure, every additional pound of legitimate normalisation is worth five, six, or seven pounds of enterprise value. A £200,000 upward normalisation at a 6x multiple is worth £1.2m of headline price.
Your accountant typically uses reported EBITDA because that is the figure they are responsible for producing. They are not incentivised to make adjustments they cannot defend in a tax context. A corporate finance adviser working on a transaction will normalise the EBITDA specifically to maximise the defensible value of the business.
The Multiple Problem
Even if the accountant's EBITDA figure were correct, the multiple they apply is often derived from generic sector benchmarks rather than current buyer intelligence.
In the UK food and beverage sector in 2026, EBITDA multiples range from 5x to over 16x depending on sub-sector, revenue quality, customer concentration, and buyer type. A multiple of 6x applied to a branded food business with strong category tailwinds and diversified customers understates the value by several turns. A multiple of 8x applied to a private-label manufacturer with high customer concentration may overstate it.
The multiple that applies to your specific business is not found in a benchmark table. It is determined by who would buy it, what they would pay for the specific combination of characteristics your business has, and what the competitive tension in a process would produce. That requires live deal market knowledge - which is exactly what an accountant does not have and a corporate finance adviser does.
The WARM Dimension Your Accountant Cannot See
For businesses with mixed revenue streams - branded products alongside private label manufacturing, food service alongside retail, own products alongside third-party distribution - a single EBITDA multiple applied to the whole business misrepresents the value.
The Weighted Average Revenue Multiple (WARM) methodology weights each revenue stream by its quality and defensibility. Branded consumer revenue in the UK typically attracts a revenue multiple of 1.5x to 3x. Private label manufacturing attracts 0.4x to 0.8x. The blended result is a more accurate picture of what the market would pay for the specific mix of revenue streams in your business.
Your accountant is not trained to apply this analysis. They see total revenue and total profit. A buyer who acquires food businesses for a living sees the composition of that revenue - and prices it accordingly.
What the Gap Between the Two Numbers Looks Like in Practice
Consider a food manufacturer with reported EBITDA of £800,000. The accountant applies a sector multiple of 6x and produces a valuation of £4.8m.
A normalisation exercise establishes that the founder's salary is £120,000 above market rate for the operational role they perform, personal vehicle costs of £18,000 run through the business, and a one-off legal cost of £45,000 in the most recent year. Normalised EBITDA is therefore £983,000.
The business has 45 percent branded revenue and 55 percent contract manufacturing. The WARM analysis produces a blended revenue multiple that, combined with the normalised EBITDA analysis, suggests a current market range of £6.2m to £8.4m - against the accountant's figure of £4.8m.
The gap is not unusual. The gap is the norm.
What to Use Instead
The right starting point for any founder making a real commercial decision about their food business is an outside view produced by someone with live deal market access in the F&B sector. That view needs to include a normalised EBITDA with every adjustment shown and justified, a current-market multiple range based on what buyers are paying for comparable businesses right now, a WARM analysis where the revenue mix warrants it, and an honest assessment of the value drivers and suppressors that would affect where in the range the business would land.
That is a materially different exercise to what your accountant produces. And the commercial consequence of working with the accountant's number - going into a buyer conversation either overconfident or undervalued - can be measured in hundreds of thousands of pounds.
Frequently Asked Questions
Should I tell my accountant I disagree with their valuation?
The most useful conversation is not about whether the accountant is right or wrong. It is about understanding that their valuation serves a different purpose to a transaction valuation. Ask them to explain their assumptions, then test those assumptions against current market data.
How much does a proper transaction valuation cost?
A proper transaction valuation from a specialist adviser ranges from a few thousand pounds for a high-level assessment to £15,000 to £25,000 for a comprehensive exit readiness report including normalised EBITDA, buyer universe mapping, and value gap analysis. In the context of a transaction, the cost of getting this right is insignificant compared to the cost of getting it wrong.
Can I do the normalisation myself?
You can identify the items. But the credibility of the normalisation - and therefore its acceptance by a buyer - depends on how it is presented and defended. A normalisation produced by the seller without supporting analysis will be challenged in due diligence. One produced by a professional adviser with market comparables is materially harder to unpick.
What if my accountant's valuation is higher than a deal valuation?
This happens when accountants apply optimistic multiples or fail to account for suppressor factors. Going into a process with an inflated expectation and then receiving a lower offer is one of the most common reasons founders walk away from transactions that would have been good outcomes. Managing expectations downward mid-process damages relationships and wastes time.
How often should I get a proper valuation done?
For any founder who expects to transact in the next three to five years, an annual review of the normalised EBITDA and a check against current market multiples is sensible. Markets move, buyer appetite shifts, and the characteristics of your business change. A decision made on two-year-old data is a guess.
