In most business sales, buyers evaluate a company based on a multiple of earnings—often adjusted EBITDA—or, in some cases, revenue. But the specific multiple applied can vary significantly depending on one critical factor: the buyer’s confidence in the future performance of the business.
Factors That Increase The Value Multiple
At Eaton Square, we’ve seen firsthand how value multiples are closely tied to a buyer’s perceived risk. The lower the risk, the higher the multiple. So, while many owners focus on achieving a particular sale price, the more strategic approach is to focus on making the business more desirable—and de-risking it for the buyer.
Below, we outline key factors that can help increase the value multiple buyers are willing to pay.
1. Strengthen Your Financial Foundations
Buyers need clarity and confidence in the numbers. Cleaning up your financials means more than tax minimisation—it means aligning internal records with external reporting, tightening key ratios, and eliminating non-core or personal expenses from your accounts. While advisors can assist with recasting earnings, only you can ensure your financial systems are clean and reliable.
2. Build a Standalone Leadership Team
If your business relies heavily on your personal involvement, it may struggle to attract premium buyers. Establish a leadership team with defined roles, decision-making authority, and formal agreements in place. A capable, independent team signals that the business can thrive under new ownership.
3. Reduce Customer Concentration
No single customer should account for more than 10% of revenue. High dependency creates perceived risk. Broaden your base by expanding into adjacent markets, acquiring new clients, and deepening your bench of suppliers and partners.
4. Reach Scale
Smaller businesses—particularly those with less than $5 million in revenue or $1 million in EBITDA—are often overlooked by institutional buyers due to the effort required post-acquisition. Consider organic or strategic growth before going to market.
5. Document Core Processes
Clear documentation across operations, finance, HR, and sales demonstrates that your business is organised and replicable. This also facilitates buyer due diligence and can support financing efforts.
6. Expand Strategically
Growth in revenue, product offerings, or geographic markets increases both perceived potential and transferable value. Show buyers that there is a well-executed strategy in place—not just ambition.
7. Demonstrate Agility
Markets shift. Buyers value companies that have shown the ability to respond, pivot, and capture new opportunities. Document examples of how your business has evolved or innovated in recent years.
8. Highlight Your Track Record
A consistent performance history increases confidence in future earnings. Use historical data to illustrate how the business has weathered market changes and continued to deliver results.
9. Know Your Market Position
Be prepared to educate buyers about your industry and your position within it. Market share, growth prospects, and competitive advantages are all key factors that influence valuation.
10. Build Your Brand
Buyers are drawn to businesses with strong reputations, not just strong revenue. Invest in your brand visibility—within your niche, not necessarily with the general public—and position your business as a trusted leader in its field.
11. Formalise Your Plans
Have a clearly articulated business plan, backed by financial forecasts and documented goals. This helps buyers see how the business can be scaled under their ownership.
12. Recognise Hidden Assets
Beyond revenue and profit, intangible assets like IP, proprietary systems, long-term contracts, or strategic alliances can significantly impact value. Make sure these are documented and well-positioned in your sale process.
13. Streamline Non-Core Functions
Many successful sellers outsource logistics, payroll, or manufacturing to keep their operations lean. This not only reduces complexity but allows buyers to see how core capabilities can be leveraged without distraction.
14. Maximise Cash Flow
Ultimately, buyers are buying future cash flows. Work on improving operating margins and net profit. Show clear, sustainable pathways to continued profitability.
15. Improve Presentation
A clean, well-maintained operation—physically and administratively—sends a strong message. Sell or retire idle assets, tidy up the workspace, and ensure your business is presented in its best light.
The Best Time to Start Is Now
Preparing your business for sale takes time—often 12 to 24 months or more. The earlier you begin, the greater your ability to shape how your business is perceived and valued by buyers.
At Eaton Square, we help business owners take a structured, proactive approach to improving value ahead of a transaction. By addressing the factors above, you’re not just improving your multiple—you’re creating a more resilient, attractive business for the right buyer.
If you’re considering a sale in the next few years, now is the time to prepare. Speak with one of our advisors to understand where you stand—and where you can go.
*This article originally appeared on IBG Foxfin site.
John Johnson
Principal
John Johnson is a Principal at Eaton Square. He serves M&A clients by marshaling strong community, regional and national relationships combined with a rich professional background in business sales and purchases. John and his Oklahoma-based firm have managed projects for the owners of hundreds of private family and entrepreneurial businesses.
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Ph: +1 (918) 749-1616
