Private · Matt Southam · September 2026
Two businesses, valued separately and on their own terms. Nathan takes Full Range Fitness, Matt takes B3 Business, each buys the other’s half, and only the difference changes hands. Every figure comes from the filed and draft accounts, the Metro Bank statements, the payroll records or the Stripe account.
Part one values the gym. Part two values B3. The balancing payment between them is at the end. All the working papers →
Part one
A gym in its tenth year, run day to day by a general manager and nine staff. Reported profit understates what it earns, because both owners were paid through its costs.
| Profit before tax, year to 31 March 2026 per the financial statements compiled by Marchant Associates, taking the later 17 August version. Turnover £416,266 | 40,253 |
| + Salaries, cars, phones and health cover for both directors Matt £28,042 and Nathan £22,108. A buyer would not pay these; they are how the owners took money out. The £4,448 of £556 monthly repayments of Nathan’s truck loan is not included: repaying a loan is a balance sheet movement, not a cost, so there is nothing in the profit to add back | 50,149 |
| + Lauren Southam, £600 a month treated as part of how Matt was paid rather than a cost of running the gym | 7,200 |
| + A year of purchases taken instead of dividends £40,580 grossed up for the corporation tax relief taken, plus £7,700 paid back into the company in the year at par | 48,280 |
| − Rental income from B3 the accounts show this inside turnover as rental income, and B3’s own accounts carry the matching £12,000 charge. It is a charge between two companies under common ownership: once they have different owners there is no charge left to make, so it leaves the gym’s profit and goes back onto B3’s in part two. The gym’s profit and loss account shows no management charges paid out at all this year | (12,000) |
| What the gym earns before paying its owners | 138,330 |
From March 2024 Nathan stopped taking a cash dividend while Matt carried on. What he took instead has to go back into the profit, because it was booked as company cost. This is the largest single adjustment on the page and the one to check first.
A dividend is paid out of taxed profit. If Nathan gives up £3,000 of dividend and the company buys him £3,000 of goods instead, the company is not £3,000 worse off — it is £3,704 worse off in profit, and can spend £4,444 at the till once the VAT is reclaimed. Every £1 of dividend forgone is £1.23 of expense and £1.48 of buying power.
So the add-back is not the cash he gave up. It is the cost the company actually carried. If the purchase ledger shows the £3,000 a month was what was booked as cost, there is nothing to gross up — that is the second control below.
Two months when both directors took nothing for cashflow are left out of both sides. The £7,700 goes in at par: cash paid into the company is already cash and is never grossed up.
| Months | What happened | Shortfall |
|---|---|---|
| 13 months | the full £2,500 | — |
| 3 months Dec 2024, Feb 2025, Oct 2025 | nothing taken. Two were months both directors skipped for cashflow; the third made up for the £3,669 deposit the company paid on Matt’s BMW in January 2024, which is the only car payment over £1,000 anywhere in the record. None of the three is money taken in goods | 7,500 |
| 9 months Mar 2025 onwards | between £1,240 and £2,200, mostly £2,200. Matt dropped the monthly figure to account for the Tesla the company was paying for at £441 a month. That car is already added back in full in the director costs above — Matt’s £12,965 of cars is BMW £7,546 plus Tesla £5,420 — so counting the dividend he gave up for it as well would charge the same car twice | 5,086 |
| Counted as taken in goods | every month is accounted for by something that is either not a company cost at all or already added back elsewhere | — |
Nathan did the same thing eight weeks earlier, and the record shows it clearly.
| Nathan | Matt | |
|---|---|---|
| Deposit | £3,663.21 on 9 Nov 2023 | £3,668.25 on 2 Jan 2024 |
| Monthly from | £610.53, 16 Nov 2023 | £611.37, 16 Jan 2024 |
| Dividend that month | nothing taken | £2,500, with a zero month later |
| Since | written off in early 2025 and replaced by the BYD at £627.61 a month, which had no deposit | still running at £611.37 a month |
Both leases are with Alphabet GB, the deposits are £5 apart, and each director gave up a month’s dividend around his own. Nathan’s falls in November 2023, outside the window used here, so it changes nothing in the figures — but it is worth recording, because it is the clearest single piece of evidence that the two of them drew the same way by design.
Nathan has produced his own schedule of what the company has bought for him since March 2026. It is the first measured figure for something that has until now been an assumption, and it does not support £3,000 a month.
| Spent at the till, 91 items card purchases and transfers, from Boots Opticians and Butternut Box to Adidas, Hillier Garden Centre and an iPhone | 16,508 |
| − VAT reclaimed by the company | (2,583) |
| Cost carried in the gym’s profit and loss account | 13,924 |
| Equivalent dividend given up the cost less the corporation tax relief on it, which is what Nathan would have had to take as a dividend to buy the same things himself | 11,279 |
| Over 4.9 months, that is a month | 2,304 |
The figure used below is £3,000 a month, taken from what Nathan drew in cash before the arrangement began. His own schedule measures £2,304. The periods are not the same — his covers months when neither director was taking a dividend and the gym was tight on cash — and the schedule may not capture everything, since it shows no American Express at all and the gym settled £51,217 of Amex in the year. But it is the only measurement there is, and moving the rate to £2,304 would cost Matt about £6,700.
| Measured as | Purchases | Paid in | Short by |
|---|---|---|---|
| What was spent at the till | 16,508 | 10,000 | 6,508 |
| The cost the company carries, after reclaiming VAT this is the measure both directors describe: money in covers the purchases less the VAT | 13,925 | 10,000 | 3,925 |
| That cost again, after corporation tax relief | 11,279 | 10,000 | 1,279 |
He paid £11,000 in on 24 July 2026, but £1,000 of it was matched by Matt paying in £1,000 the same day, so £10,000 is the fair comparison. On the measure the two of them use, the £10,000 is about £3,900 short.
| Balance at 31 March 2026 | 25,470 |
| + Paid in on 24 July 2026 | 11,000 |
| − Six monthly truck repayments of £556 | (3,336) |
| So the balance would be | 33,134 |
| It is actually | 25,255 |
| So this much has been charged against his account | 7,879 |
| Purchases after 31 March, net of VAT | 12,647 |
| Not yet charged to him | 4,768 |
Two different routes — his schedule against his payments, and his loan account against the ledger — land between £3,900 and £4,800. The answer to whether the £10,000 covers it is no, it is roughly £4,000 short, and Richard should reconcile the two.
Three things in Nathan’s schedule are worth knowing.
It includes £2,696.50 paid to Ice and Air on 29 May 2026. That is part of the air-conditioning, and by putting it in his own list of personal benefits Nathan has treated it as his. Whatever is decided about the rest of the £51,884, that much is not in dispute.
It uses a 25% corporation tax rate to work out the net cost. Full Range Fitness pays the 19% small-profits rate — the accounts show £8,597 of tax on £45,248 of chargeable profit. At 19% the cost to the company is £835 higher than his schedule shows.
Two items look like duplicates: an iPhone at £669 appears both as a dated Apple purchase on 14 June and again as an undated line, and £211.75 of electrical goods appears twice the same way. Together that is £881 counted twice, which overstates his own figure rather than understates it.
One risk that sits inside the company rather than between the two directors. Input VAT is recoverable on business expenditure. A schedule of opticians, dentists, restaurants, a garden centre, an iPhone, sportswear and dog food is not business expenditure, so the roughly £2,583 of VAT reclaimed on it, and whatever has been reclaimed on the same basis in earlier periods, may not be recoverable. The same goes for the corporation tax deduction unless the amounts are treated as remuneration and put through PAYE.
This is not a point between Matt and Nathan and nothing is claimed for it here. It is a reason for the agreement to carry proper tax warranties, and for both directors to have Richard look at the treatment before either of them signs anything.
Two contractors, £51,884 between 29 May and 3 September 2026.
| Date | Paid to | £ |
|---|---|---|
| 29 May 2026 | Ice and Air, air conditioning Nathan’s this one appears in Nathan’s own schedule of personal benefits, so it is treated as his rather than as gym refurbishment and is dealt with under purchases below | 2,697 |
| 3 Jul 2026 | Ice and Air, air conditioning | 3,701 |
| 3 Jul 2026 | Ice and Air, air conditioning | 4,066 |
| 22 Jul 2026 | Elmes and Smart, door install | 300 |
| 24 Jul 2026 | Elmes and Smart, mezzanine deposit | 18,000 |
| 24 Jul 2026 | Ice and Air, air conditioning | 3,191 |
| 24 Jul 2026 | Ice and Air, air conditioning | 7,142 |
| 3 Sep 2026 | Elmes and Smart, mezzanine | 12,786 |
| Total out | 51,884 | |
| Gym refurbishment, after taking out the payment Nathan claims as his own | 49,187 |
Two dates are worth noting, neither of which is claimed for.
On 24 July £22,000 came into the company on the same day £28,333 went out to the two contractors: £11,000 from Nathan, £1,000 from Matt and a £10,000 loan from NuYu. The mezzanine deposit was funded by money put in that day, including from a third company both directors own.
On 3 September a further £12,786 went to Elmes and Smart. Matt was shown the layout plans for the first time on 9 September, six days later, and the staircase was relocated on the 14th.
The price is struck on 31 March 2026. Anything either director has taken out since comes from a company they still own half of each, so it is settled separately from the valuation rather than inside it. Matt stopped taking a dividend in February 2026 and has taken nothing since. Nathan has continued to take purchases.
| Nathan’s purchases, 1 April to 9 August £14,975 at the till, net of the VAT the company reclaimed | 12,647 |
| − Paid back into the company on 24 July | (10,000) |
| Net amount taken out since the valuation date | 2,647 |
| Matt, over the same period | — |
| Half returned to Matt on completion | 1,324 |
This is not a claim about the past and it is not an equalisation of what either has drawn over the years, which is not attempted anywhere in this proposal. It is the ordinary consequence of fixing a price on a historic date: from that date the two of them share whatever the company holds, so anything one takes out is half the other’s.
| Component | What it is | £ |
|---|---|---|
| Original loan | the balance at 31 March 2024, before the purchases arrangement began. Not in dispute | 7,750 |
| Truck balloon, unrepaid | £17,320 funded July 2025, £7,784 repaid at £556 a month since. A real loan against an asset the company still owns | 9,536 |
| Purchase money not yet drawn back | the rest of the rise since March 2024. On the purchases reading this is settling a cost rather than lending | 7,968 |
| Owed to Nathan | 25,255 |
Every payment Nathan has made into the company — eleven of them, £47,020 in total — falls between September 2024 and July 2026, and he paid in nothing at all in the three years and nine months before that. Matt’s own £2,864 has not moved since March 2024. Both balances should be reconciled to one agreed date before either is paid, with the truck shown separately.
| × 2.0 earnings multiple | 276,659 |
| Net assets at 31 March 2026 per the same financial statements. The QuickBooks ledger shows £35,697 at that date, £6,290 higher; the accounts figure is used here so the profit and the assets come from the same document. Richard should reconcile the two | 29,407 |
| Equity value, 70% earnings / 30% assets | 204,372 |
| Half share | 102,186 |
| − The truck leaves with Nathan book value £14,616, less the £9,536 truck loan cancelled against it. Half of the net change | (2,540) |
| + Mezzanine and air-conditioning, half returned | — |
| + Taken out since the valuation date, half returned | 1,324 |
| + Loan account written back, half | — |
| + Matt’s director’s loan account repaid | 2,864 |
| Nathan pays Matt | 102,510 |
Part two
Subscription software with recurring card income, growing fast. It has no employees at all — no salaries appear anywhere in its accounts — so its reported profit is struck before anyone is paid to do the work.
| Profit before tax, year to 31 May 2026 draft, prepared 20 August 2026. Turnover £223,411 | 161,693 |
| + Management charge paid to the gym the same £12,000 taken out of the gym’s profit in part one, so nothing is counted twice | 12,000 |
| − Salary and employer NI for whoever runs it B3 employs nobody. A buyer has to fund the role before anything is left over | (56,750) |
| Normalised profit on last year | 116,943 |
| Run-rate profit on current takings Stripe takings for January to August 2026 annualised at £336,607, converted to turnover at 85%, with 70p in the pound dropping to profit | 160,836 |
| Maintainable profit, 65% weight on the run rate | 145,474 |
The manager and the key-person discount are two different things, and B3 needs both. The salary pays for the work that is being done today, which is currently done by one person for nothing. The discount prices the risk that there is only one person and no organisation behind them: no team, no contracted revenue, no asset base, and nothing that survives that person walking away.
Those are not the same risk and they do not cancel. Growing B3 from here means hiring — a second pair of hands is the only way the run rate keeps climbing, and that is true whether or not Matt stays in the business. So the salary comes out of profit and the discount comes off the multiple.
| × 3.00 multiple | 436,421 |
| − Key-person discount, 15% | (65,463) |
| − Business risk discount, 15% | (65,463) |
| + Net assets after the corporation tax provision £24,889 at 31 May 2026 less the £39,114 due on 1 March 2027 | (14,225) |
| Equity value | 291,270 |
| Half share | 145,635 |
| + Drawings true-up Matt’s household drew £1,100 more than Nathan in FY25; identical in every later period | 550 |
| Matt pays Nathan | 146,185 |
The result
Each buys the other’s half. Only the difference between the two changes hands.
| Nathan pays Matt for his half of the gym | 102,510 |
| Matt pays Nathan for his half of B3 | 146,185 |
| Matt pays Nathan the difference | 43,675 |
Matt pays Nathan
£43,675
on the settings above, before legal costs and tax
Why these settings
The page loads on Balanced. Nothing here is a fact — each of these is a judgement where a reasonable person could land either side, so each one is set out with the case for both readings and the midpoint taken. The figure in the corner is what the whole question is worth between the two extremes.
Profit has gone backwards. It was £86,896 in 2021 and £40,253 last year, while turnover climbed from £176k to £416k — so the business is working harder for less. It is a single site on a lease in a competitive town, with a refurbishment still being paid for. Two times is generous for that.
Small owner-managed gyms change hands between two and three times. This one is not owner-dependent: it has a general manager on £41,086 and nine staff, and it runs without either of us. Turnover has risen every year for six years. That is the top half of the range, not the bottom.
2.25× sits between them. Both readings are honest and neither can be proved; the range itself is the evidence.
His own schedule measures it. Ninety-one purchases between March and August 2026 come to £16,508 at the till, which is £11,279 of dividend given up, or £2,304 a month. That is a measurement, not an assumption, and it is the only one either side has produced.
£3,000 is what he actually drew in cash every month before the arrangement started; the swap was that dividend for goods. His schedule covers a later period when neither director was drawing and the gym was tight on cash, and it shows no American Express at all while the company settled £51,217 of Amex in the year.
£2,750 splits it. The FY26 purchase ledger would settle this properly, and it is the first thing to ask Richard for.
He was asked to clear things with Richard rather than with Matt, which he did. It is an investment in the gym he is buying and he carries the cost of it either way. Matt has said in terms that he is not standing in the way of the work, and it is hard to disown a project and then charge for it.
£49,187 of gym refurbishment left the account between May and September, and a further £12,786 of it went out on 3 September — six days before the layout plans were shown to him for the first time on the 9th. The staircase was moved on the 14th. A 50/50 company cannot commit that without both directors, and not standing in the way of the work is not the same as approving it.
25% is taken. The £2,696.50 of Ice and Air that Nathan lists in his own schedule as a personal benefit is taken out of this figure and dealt with under purchases instead, so the same payment is not counted twice.
It is on the balance sheet as a company debt and the accountant has signed it off that way for years. It is his own money, already taxed, and calling part of it something other than a loan is Matt’s characterisation rather than the ledger’s.
Every payment he has made in — eleven of them, £47,020 — falls between September 2024 and July 2026, and nothing at all in the three years and nine months before. On the arrangement both describe, that money was settling the cost of goods, not lending. Paying it out in full pays him twice for the same purchases.
The £7,968 residue is written back; the original £7,750 and the £9,536 truck loan stay. Those two are loans on any reading, so only the residue is genuinely arguable.
Add back what the company actually booked as cost. If the ledger shows £3,000 a month of purchases, the add-back is £3,000. Grossing it up to £3,704 assumes a fact nobody has checked and inflates the profit by a quarter.
A dividend comes out of taxed profit. Giving up £1 of dividend frees £1.23 of pre-tax profit and £1.48 at the till once VAT is reclaimed — which is exactly why taking goods instead of cash was worth doing. The cost the company carried is the grossed-up figure.
Grossed up, but flagged. This is the one question on the page that is not really a judgement call — the FY26 purchase ledger answers it outright, and whichever way it falls, it falls cleanly.
B3 has roughly doubled every two years — turnover £84,553 to £223,411 in three years, and the Stripe run rate is higher again. Pricing it on last year’s profit alone hands Matt eight months of growth for nothing. This is the asset with a future and the price should say so.
You buy a business on what it has earned, not on what it might. The run rate is eight months of Stripe takings extrapolated to a year, in a business with no contracted revenue where every customer can leave monthly. Paying today for growth that has not been banked is the buyer taking all the risk.
50%. This is the single largest question on the page — nearly £46,000 between the two readings, which is more than three times the balanced payment itself.
£45,000 is a fair rate for running a small subscription business that largely runs itself. Loading the salary is simply a way of depressing the profit and therefore the price, and the higher the number the more convenient it is for the buyer.
B3 has no employees at all — not one salary appears anywhere in its accounts. Every hour of work in it is currently done for nothing. Replacing someone who can build the product, hold the customers and grow the thing is a £60,000-plus job, and until that person is hired the growth in the price cannot happen.
£55,000 plus employer national insurance. The key-person discount sits alongside it and is a different point: the salary pays for the work, the discount prices there being only one person doing it.
Recurring subscription revenue growing at this rate is the most valuable kind of income there is. Applying a multiple and then taking 40% off contradicts the multiple — either the business is worth three times maintainable profit or it is not.
No fixed-term contracts, no asset base, month-to-month subscriptions any customer can cancel, and one person on whom the whole thing depends. Those are two separate risks and they are exactly what the mediator’s own notes record.
30% in total, split evenly between the business risk and the key-person risk, so each can be argued on its own.
He has paid £10,000 back into the company against it, and the rest is coming. Picking over a few thousand pounds of shopping in the middle of a deal is not worth either side’s time.
The price is struck at 31 March. After that date the two of them share whatever the company holds, so anything one takes out is half the other’s. Matt stopped taking a dividend in February and has taken nothing since; Nathan has taken £12,647 net of VAT and put £10,000 back.
The net £2,647 is split, so £1,324 returns to Matt. This is not an equalisation of historic drawings, which is not attempted anywhere on this page. It is the ordinary consequence of fixing a price on a past date.
What this adds up to. Nine open questions, and taken to their extremes they span roughly £180,000 — from Nathan paying Matt about £39,000 to Matt paying Nathan about £96,000. Balanced lands at £13,937 from Matt to Nathan.
Two of those questions — the purchase ledger and the loan account reconciliation — are not really matters of judgement at all. Richard can answer both, and between them they are worth about £12,000. Settling them first would narrow everything else.
£51,884 has gone on the mezzanine and the air-conditioning since May. Matt was shown the layout plans for the first time on Wednesday 9 September and the staircase was relocated the following Monday.
Matt is not asking for any of it back and is not standing in the way of the work. The gym is the business he is selling and the buyer should have a free hand in it. He has not approved the plans, the layout or the spend, he was not consulted before the work was scheduled, and he will not be funding the project or guaranteeing borrowing against it.
That is why the price is struck on fixed historic dates and not re-cut afterwards. The cost and the benefit of the refurbishment then both sit with the person making the decisions about it.
| Nathan takes 100% of Full Range Fitness and the Ford Ranger at its £14,616 book value, with his £9,536 truck loan cancelled against it | — |
| Matt takes 100% of B3 Business | — |
| NuYu Training and Development is dealt with in the same agreement owned 50/50 and in neither valuation, so its net position is split or the company wound up | — |
| Nathan’s director’s loan stays inside the gym still owed to him personally, drawn down as the cash allows, and not taxed as income because it is his own money coming back | 25,255 |
| Matt’s director’s loan is repaid to him | 2,864 |
| Both resign as directors of the company they are leaving, and personal guarantees are released | — |
| The FY26 purchase ledger, with payee and coding this decides the largest adjustment on the page: whether Nathan’s £3,000 a month is the dividend he gave up, which is grossed up, or the cost the company booked, which is not | £48,280 |
| How the directors’ cars are coded the accounts show £15,738 of motor vehicle hire and leasing, while the bank shows £19,185 of lease payments on the four directors’ vehicles. The balance is presumably inside motor running expenses; it does not change the add-back but it should be confirmed | £19,185 |
| Both directors’ loan accounts, reconciled to one agreed date, with the truck shown separately neither the July 2026 payments in nor the NuYu advance is in the ledger yet | £28,119 |
| That the 17 August accounts are the set being filed taken here as final: profit £40,253, tax £8,597, net assets £29,407. The signed 7 August set shows £40,254, £8,581 and £29,424. The two are £17 apart on net assets so the price barely moves, but only one should be in circulation when the agreement is drafted | £40,253 |
| Net assets: the accounts against the ledger the accounts show £29,407 at 31 March 2026, QuickBooks £35,697. The accounts figure is used here. The gap is worth £944 on Matt’s half | £6,290 |
| Four balances in the gym’s current assets other debtors £19,005, prepayments £10,185, events suspense £1,886 and stock £1,858 are identical to the penny at March 2024, March 2026 and September 2026. They are all assets, so they hold the price up | £31,935 |
| B3’s corporation tax and the Stripe reconciliation £39,114 falls due 1 March 2027 and is not in the draft accounts; FY26 turnover was set before the Stripe figures were checked | £39,114 |