How to value my business for sale (and why it’s the key to retiring rich)
- Evo-Valuations
- Sep 7
- 3 min read
Introduction
How to value my business for sale. If you’re planning to sell your business in the next few years, the single most important number you need to know isn’t your revenue, profit, or even your business valuation. It’s your Freedom Number; the amount of money you need after tax to fund your ideal life post-exit.
Without it, you risk selling too early, undervaluing your business, or holding on for too long out of fear.
In this article, we’ll show you exactly how to calculate your Freedom Number and use it to guide your exit plan so you can retire rich and on your terms.
What Is a Freedom Number?
Your Freedom Number is the minimum net proceeds you need from the sale of your business to live comfortably without financial stress.
It’s based on your lifestyle goals, time horizon, and planned activities post-exit, not just what the market might pay for your company.
Think of it as your personal sale target. Without it, you’re flying blind.
Why Knowing Your Freedom Number Matters
When you know your Freedom Number, you can:
Set a clear sale price target and reverse-engineer how to get there.
Avoid underselling your business for a figure that won’t sustain you.
Decide on the right deal structure - full sale, part-exit, or earn-out.
Plan for tax so you keep more of what you earn.
If you want to boost your business value to reach your Freedom Number faster, check out the following article: Case Study: "From 'Just Done' to Joyful Exit: How Dave Rediscovered His Freedom"
Step-by-Step: How to Calculate Your Freedom Number
Step 1: Define Your Annual Income Goal
Start with the amount you want to live on each year after selling.
Ask: “What will it cost to maintain my ideal lifestyle?”
Include:
Household expenses
Travel, hobbies, and leisure
Healthcare costs
Big lifestyle upgrades you want
Example:
You decide you need £60,000 per year.
Step 2: Choose Your Time Horizon
Decide how many years you want this income to last 20 years, 30 years, or indefinitely (if you’ll invest the proceeds for ongoing returns).
Example:
£60,000/year × 20 years = £1,200,000
Step 3: Add One-Time Costs
Factor in big-ticket expenses you want to cover post-exit, such as:
Paying off your mortgage
Funding children’s education
Relocation or property purchase
If your one-time costs total £200,000, your target rises to £1,400,000.
Step 4: Factor in Tax and Fees
Remember: The sale price isn’t what you keep. You’ll likely pay:
Capital Gains Tax (potentially reduced with Business Asset Disposal Relief)
Legal and advisory fees
Debt repayments
If you expect a 20% total deduction, you’ll need to increase your Freedom Number to cover it.
Calculation:
£1,400,000 ÷ (1 – 0.20) = £1,750,000 sale price target
Using Your Freedom Number in Exit Planning
Once you know your Freedom Number:
Get a current valuation, see how far you are from your target. Evo-Valuations Reports start from £199 (+VAT)
Identify valuation gaps: use the “8 Levers of Business Value” to close them.
Create a 3-year plan: focus on profit quality, systemisation, and risk reduction. ( See Exit-Ready for a step by step guide to getting your business ready for sale)
Review annually: track progress against your target.
You can also start shaping your post-exit future now by reading The Ultimate Post-Sale Wealth Plan: How to Keep More of What You Sell For
Pro Tip
If you’re considering an earn-out or part-exit, your Freedom Number can be lower up front, but your business will need to run without you for the deal to work.
Related Reading
Your Next Step
Your Freedom Number isn’t just a figure on paper, it’s your exit compass. It tells you when you’re ready, what your target sale price is, and how to structure your deal for maximum security and freedom.
Get instant clarity on your Freedom Number and start tracking your progress toward it with the Exit Smart. Retire Rich. 3-Year Exit Plan guide and the Exit-Ready App, just £99 for the complete toolkit. You’ll get:
The full step-by-step guide
Built-in progress tracking via the app
Practical tools to increase your business value year by year
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