The EBITDA Whisperer: Boosting Your Business Valuation
Profit, Not Just Revenue, Is What Buyers Actually Want
You’ve heard it before—"Revenue is vanity, profit is sanity." But when it comes to selling your business? Profit is the only thing that matters.
You could be pulling in $10 million in revenue, but if your margins are a disaster, buyers won’t bite—or worse, they’ll offer you pennies on the dollar. In fact, a $5 million business with clean 20% profit margins is worth more than a $10 million one with sloppy 5% margins. The math doesn’t lie, and neither do the buyers.
Let’s talk about the one number that rules them all: EBITDA.
Wait... What Is EBITDA and Why Should You Care?
If the term EBITDA sounds like a made-up financial spell, you’re not alone. It stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. And yes, it’s a mouthful.
But here’s the deal: it’s the gold standard when it comes to business valuation. Buyers use it to determine how much your business is really worth—because it strips out financial fluff and reveals the true operating profit of your company.
If you’re not tracking EBITDA—or even worse, you’re not sure how to say it—you’re walking into a negotiation blindfolded.
Real Talk: Clean Financials = More Money at Exit
If your books are messy, you’re giving buyers the perfect excuse to lowball you.
Let’s look at HVAC owner Mike. He came to us doing $10 million in revenue and hoping for a $30 million exit. But his margins were hovering around 10%. After cutting inefficiencies, optimizing his pricing and operations, and tightening up his books, he hit 33% profit margins. Suddenly, buyers were knocking at the door with much higher offers.
The lesson? Clarity gets you paid.
The 3 Numbers Every Founder Must Know
EBITDA
This is your operational profit before taxes and interest. It’s what buyers multiply to calculate your business’s value.Seller Discretionary Earnings (SDE)
This is your EBITDA + your “add-backs” like personal expenses (meals, cars, trips) that run through the business. These don’t hurt your valuation if disclosed and categorized correctly.Valuation Multiple
This is the magic number buyers use to multiply your EBITDA or SDE. Small businesses typically get 2–5x, but with high margins and systems? You could command 5–10x. That’s real money.
Hidden Profit is Killing Your Valuation—Here’s Where to Find It
Most businesses have 5–15% of profit hiding in plain sight. Want a few examples?
Marketing waste: Up to 25% of budgets are wasted on channels that don’t convert.
Vendor terms: One of Lani’s clients missed out on $250,000 a year by not negotiating better terms with suppliers.
Cost of goods: Like Rosie the baker, who hadn’t updated pricing to match skyrocketing butter costs. Once she did? Profit returned immediately.
Office bloat: Another client found $10,000/month going to office supplies… for a 6-person team.
All of these are fixable. And once you fix them, you don’t just run more profitably—you become way more sellable.
What Buyers REALLY Want (Hint: It’s Not Just Growth)
Buyers don’t just want flashy top-line numbers. They want:
Predictable profit
Clean books
Repeatable systems
Operational independence
Risk mitigation
When those boxes are checked, your valuation multiplies—literally.
Your Action Step: Uncover the Profit Hiding in Your Business
Want to know what buyers would think if they saw your business today?
Take the Changes Assessment to find out where your hidden profit is leaking, how your financials stack up against real benchmarks, and what you can fix now to boost your valuation down the line.
Free Resources to Go Further:
📌 7 Ways AI Can Boost Your Sales and Save You Time – Download this free guide:
👉 https://ai.activatetoascend.com/get-7ways-ai
📌 3 Ways Your Business Can Use AI TODAY to Stop Leaking Money – Save your seat for the free live webinar:
👉 https://webinar.activatetoascend.com/webinar-register-general
📌 Changes Assessment – Discover where your business is leaking time, money, and momentum:
👉 https://stealthfreedomtoexit.com/changes
