The 10-Minute Back-of-Napkin Valuation Every UAE Owner Should Do Once a Year

By Bill Anderson, FCCA, Chief Executive Officer, Assetica · Published 2026-06-03

Direct Answer: A back-of-napkin valuation takes ten minutes: (1) normalise your profit by adding back personal costs and deducting a market salary for your replacement, (2) choose an honest multiple range based on five quality questions, (3) multiply and adjust for debt and surplus cash, (4) sanity-check against asset value, and (5) write the number down and track it yearly. It is a navigation tool, not a sale price, but it is far better than guessing.

Most UAE business owners can tell you their revenue to the dirham, their rent, their payroll, and what their best client owes them. Ask what the business itself is worth and you get a shrug, a wild guess, or a number borrowed from a rumour about someone else's exit.

That is a problem, because the value of your business is probably your largest single asset, and you are making decisions that affect it every month without knowing what it is. You would not ignore the value of a property portfolio for years at a time. The business deserves the same basic attention.

A formal valuation has its place: selling, raising investment, partner disputes, Golden Visa applications, succession planning. But between those moments, there is a rough-and-ready exercise every owner should do once a year. It takes about ten minutes, requires nothing more than your last set of accounts and a calculator, and will land you within a sensible range rather than a fantasy.

Here is the framework, step by step, followed by a worked example.

Step 1: Work out your real profit (3 minutes)

Not the profit in your accounts. The profit a buyer would recognise. For most owner-managed SMEs the right measure is what valuers call seller's discretionary earnings, or for larger businesses a normalised EBITDA. You get there by adjusting your accounting profit:

Add back:

• Your own salary and benefits, if you pay yourself through the company
• Genuinely one-off costs (a lawsuit, a relocation, a flood)
• Personal expenses running through the business (be honest)
• Interest and depreciation, if you are working towards EBITDA

Deduct:

• A market salary for someone to do your job. This is the step everyone skips and it is the one that matters most. If you work sixty hours a week running operations, sales and finance, the business needs to pay a real general manager to replace you. Use the salary you would actually have to offer to hire your replacement in Dubai, not a hopeful figure.
• Any income that will not continue: a one-off contract, a subsidy, rent the company collects from an asset you are keeping
• Above-market amounts paid to family members, normalised to market rate

What remains is the earnings figure the whole valuation rests on. If this number is negative or near zero after a market salary for your replacement, you have learned something important already: the business currently has little earnings value beyond your own employment, and its worth sits mainly in its assets. That is not a pleasant discovery, but it is far better to make it on a napkin than across a negotiating table.

Step 2: Choose a multiple range, honestly (3 minutes)

Privately held SMEs in most sectors change hands at low single-digit multiples of these normalised earnings. The exact range depends on sector, size and the quality factors below, which is why this step uses a range rather than a single number.

Rather than fixating on the sector average, score your business on the five questions that move a multiple most:

• Could it run without you for three months? Yes pushes you up the range. No pushes you down hard.
• Is revenue recurring or re-won every year? Contracts and retainers push up. Pure project work pushes down.
• Does any single client exceed roughly 20 per cent of revenue? If yes, push down.
• Are the accounts audited and clean? Clean books push up. Cash sales and mixed personal expenses push down.
• Has profit grown over the last three years? Genuine, explainable growth pushes up. Flat or lumpy pushes down.

For a rough exercise, take a conservative range, say 2x to 4x for a typical small owner-managed business, and place yourself within it. Mostly "good" answers, use the top. Mostly "bad" answers, use the bottom, or below it. Resist the urge to grade yourself generously. The buyer will not.

If your business is larger, professionally managed, and audited, with several million dirhams of EBITDA, the relevant range shifts upward, but the same five questions still decide where in it you sit.

Step 3: Multiply, then adjust for debt and cash (1 minute)

Multiply your Step 1 earnings by your Step 2 multiple. That gives you a rough enterprise value: the value of the business operations.

Then adjust for the balance sheet:

• Subtract bank loans and other borrowings the buyer would inherit
• Add genuinely surplus cash, meaning cash beyond what the business needs to operate
• Look hard at receivables: anything seriously aged should be treated as worth a fraction of face value, or nothing

The result is a rough equity value, which is the number that would actually land with you in a sale.

Step 4: Sanity-check against asset value (2 minutes)

Quickly total what the business owns: equipment at realistic second-hand value, inventory at what it would actually fetch, fit-out at close to nothing unless a buyer specifically wants the location.

If this asset figure is higher than your Step 3 earnings-based figure, the asset figure is your floor, and the exercise is telling you the business earns too little relative to what is tied up in it. If the earnings figure is comfortably higher, good: the difference is essentially your goodwill, the value of the business as a system rather than a pile of assets.

Step 5: Write the number down (1 minute)

Date it, note the inputs, and keep it. The single number matters less than the trend. Doing this every year turns a vague feeling about your business into a measurable trajectory, and shows you precisely which lever (earnings, multiple, or balance sheet) moved.

A worked example

The numbers below are entirely hypothetical, made up to show the mechanics.

Take a Dubai trading and services business. Accounting profit last year: AED 900,000. The owner takes no salary, draws money informally instead, and works full time running everything.

Step 1, normalised earnings: Start at 900,000. Add back AED 60,000 of clearly personal expenses found in the accounts. Then deduct a market salary for a general manager to replace the owner: AED 420,000 a year including costs. Deduct AED 90,000 of profit from a one-off contract that will not repeat. Normalised earnings: roughly AED 450,000. Half the headline figure, before any negotiation has started.

Step 2, multiple: The owner answers the five questions honestly. The business cannot run without them (bad), revenue is mostly repeat customers but nothing contracted (middling), the largest client is 30 per cent of revenue (bad), accounts are compiled but not audited (middling), profit has been roughly flat for three years (middling). That is bottom-of-range territory: call it 2x to 2.5x.

Step 3, value: 450,000 multiplied by 2 to 2.5 gives AED 900,000 to 1,125,000 of enterprise value. The company has a AED 200,000 vehicle loan and no surplus cash. Rough equity value: AED 700,000 to 925,000.

Step 4, sanity check: Equipment and stock would fetch perhaps AED 400,000. The earnings figure is higher, so the earnings figure stands.

The owner walked in believing the business was worth "two or three million, easily", because revenue is AED 6 million and a friend's company supposedly sold for half its turnover. Ten minutes later they have a defensible range of roughly AED 0.7 to 0.9 million, and more usefully, a precise list of why: owner dependence, client concentration, no audit, flat profits. Fixing those is the work. Each fix moves both the earnings figure and the multiple, and improvements there compound, because the multiple is applied to the earnings.

What this exercise is not

A napkin valuation is a navigation tool, not a sale price, and it will not survive contact with a real transaction, a dispute, a bank or a visa application. Formal valuations exist because buyers, courts, banks and government bodies need methodology, evidence and independence, none of which fit on a napkin. Sector dynamics, market conditions and company-specific issues can move real outcomes well outside any rough range.

But as an annual habit, it does something a formal valuation cannot: it keeps value on your dashboard all year, next to revenue and cash. Owners who track it stop making decisions that grow turnover while quietly destroying value, and start noticing that the most valuable project available is often not a new client at all. It is removing themselves from operations, signing one client to a contract, or finally getting the accounts audited.

Ten minutes, once a year. The honest version of the number, not the dinner-party version. And when a real event arrives, a buyer, a partner exit, a visa application, you will walk into it knowing roughly where you stand instead of finding out the hard way.

This framework is a simplified educational tool and not a substitute for a formal valuation. All figures in the worked example are hypothetical. Multiples and outcomes vary widely by sector, size and circumstances.

Frequently Asked Questions

Speak to Assetica about Business Valuation

Assetica is an independent business valuation firm in Dubai. We do not audit and we do not broker deals, so the number carries no conflict. Read more about business valuation, or book a scoping call. Standard reports are issued in five to seven business days.

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