Updated 28 October 2026
Ask ten people what your business is worth and you'll get ten answers. Ask a buyer and you'll get one method. Almost every buyer of a privately owned South African business starts in the same place: how much profit does it make, and how many years of that profit am I willing to pay for today?
The short answer: a number of years of profit
If your business makes R3 million profit a year and buyers in your industry usually pay four years of profit, the starting point is R12 million. That 'number of years' is what advisors call the multiple. It's the single most important number in your sale.
The profit buyers use is normally profit before tax and interest — and before the cost of wear-and-tear on equipment. They use it because tax and loans belong to you, not the business they're buying.
Typical starting points by industry
These are the starting points our calculator uses before it adjusts for your business. Think of them as the first number a buyer has in their head, not the final price.
| Industry | Years of profit |
|---|---|
| Software & tech | 6.5× |
| Healthcare | 5.5× |
| Financial services | 5.0× |
| Manufacturing | 4.5× |
| Professional services | 4.5× |
| Logistics & transport | 4.0× |
| Wholesale & distribution | 4.0× |
| Farming & food processing | 4.0× |
| Construction & trades | 3.5× |
| Hospitality & tourism | 3.5× |
| Retail shops | 3.0× |
What pushes the number up
- Repeat income. Contracts, subscriptions and regular orders are the biggest single lever. A business where most income comes back every month can be worth a quarter more than one living on once-off jobs.
- Steady growth. Sales growing more than 10% a year tell a buyer the future is better than the past.
- A team that runs things. If the business can run for a month without you, buyers worry less and pay more.
- Long customer contracts. Customers signed up for two years or more make future profit feel safer.
- Healthy margins. Keeping more of every R100 you sell shows pricing power.
What pulls the number down
- One big customer. If more than half your sales come from one customer, expect buyers to knock up to a third off — or ask for part of the price to be paid later.
- Owner dependence. If every key relationship runs through you, the buyer is buying a job, not a business.
- Shrinking sales. A downward trend usually costs you about a fifth of the multiple.
- Messy books. Numbers a buyer can't trust are numbers a buyer discounts.
- A young business. Under five years of track record means less proof that profits will last.
Don't forget the costs a buyer won't have
Many owners run personal costs through the business — a family member's salary, a car, a once-off legal bill. A new owner won't carry those, so they're added back to profit before the multiple is applied. Cleaning this up properly often lifts the profit a buyer sees by 10% to 20%, and every extra rand of profit is multiplied.
A worked example
Take a professional services firm in Gauteng with R25 million in sales, R4 million profit and 12 years of trading, growing about 12% a year.
- Start with the industry: professional services begins at about 4.5 years of profit.
- Steady growth of 10–20% a year lifts that by about 10%, to roughly 5 years.
- The owner's salary and car run through the business — adding those back lifts the R4 million to about R4.3 million.
- Roughly 5 × R4.3 million gives a middle value of around R21 million, with a range either side.
What a valuation is — and isn't
An online calculator gives you an honest starting range in minutes. A full valuation uses your actual financial statements and is done before you go to market. The final price is whatever a willing buyer agrees to pay — which is why having more than one interested buyer matters so much.
