Preparing Your Business for Sale

Getting Ready to Sell: What Buyers Want to See

We know your business is more than just numbers on a page: it’s your life’s work, your legacy. Whether you’re engaging a broker or speaking directly with a buyer, the first impression starts with your data. Clean, well-organized financials not only make you look more credible, but they also help speed up the process, increase buyer confidence, and maximize your valuation. 

Buyers want to understand how your business performs and how much cash it generates. That usually means two things: 

• Reliable, standardized financials

• A clear picture of your EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. In simple terms, it’s a rough measure of your business’s cash earnings from operations. Buyers care about it because it provides a clean, apples-to-apples way to compare your company to others, regardless of how it’s financed or structured. 

Many buyers think in terms of “multiples of EBITDA” when estimating value. For example, if your business generates $3 million in EBITDA and comparable companies sell for 5-6x EBITDA, that implies a valuation range of $15-18 million. 

It’s also worth noting that EBITDA levels often shape what types of buyers are interested: 

• Businesses with $2M-$5M+ in EBITDA tend to attract lower middle-market private equity firms, family offices, and well-capitalized search funds

• Smaller companies may appeal more to individual operators, strategic buyers, or independent sponsors

Fortunately, EBITDA is not hard to calculate once your books are in good shape. You can start with your operating profit (sometimes labeled as EBIT in financial software like QuickBooks), then just add back depreciation and amortization, which are non-cash expenses often listed at the bottom of your income statement. If you’re unsure where these numbers are, your accountant or bookkeeper can usually help within a few minutes.

Here is what it looks like in practice: 

1. Clean Up Your Financials

Buyers will want to see the full picture. That usually means Profit & Loss statements, Balance Sheets, Cash Flow reports, and tax returns from the past three to five years. Make sure the formatting is clean and consistent—if your 2021 P&L looks nothing like your 2023 one, take the time to align them. 

Consistency isn’t just about presentation. Buyers will study your numbers to spot key trends, such as margin expansion or cost structure shifts. Clear, apples-to-apples reporting helps them read between the lines more accurately. A tidy financial package makes their job easier, builds credibility, and keeps your valuation conversations more straightforward. 

2. Clarify Your Earnings (a.k.a. Normalize EBITDA)

Most buyers value using EBITDA–your earnings before interest, taxes, depreciation, and amortization–because it helps them understand the core profitability of your business. You’ll want to build a simple “EBITDA bridge” that clearly outlines any add-backs: things like one-time legal fees, a personal car lease, a discretionary bonus to a family member, or any other expenses that won’t carry over post-sale. 

Buyers aren’t judging; these add-backs are common and expected. What they care about is clarity and consistency. A clean, well-supported add-back schedule not only establishes trust early but it can also directly impact valuation. In some cases, clearly articulating your true earnings can be the difference between getting 4x vs. 6x EBITDA.

3. Map Out Key Relationships

Buyers also care about the people and partners who keep your business running. Pull together a short list of your top suppliers and biggest customers, along with any key contract terms or contacts. It’s also helpful to include a quick overview of critical software systems, licenses, or integrations that are central to day-to-day operations. 

Make note of any customer or supplier concentration as well. If one client accounts for 40% of your revenue or a key vendor provides a unique component, buyers will factor that into their risk analysis. Calling it out proactively signals transparency and gives you a chance to frame the relationship as stable or long-standing, which can ease concerns and strengthen your position. 

4. Summarize Your Metrics

Put together a brief snapshot of your performance: gross margins, revenue by product or segment, customer retention/churn, headcount, and any other KPIs that define your business. Think of this like the first few slides in a pitch deck, where it should be easy to digest and easy to talk through on a call. 

It’s also helpful to include trailing 12-month (TTM) metrics as well as forward-looking indicators if you track them; things like pipeline, bookings, or contracted revenue. A clean summary not only helps buyers understand the business faster, it signals that you’re prepared and thoughtful. Who needs a banker?

5. Keep Everything Organized

Create a clean folder structure: Financials, Legal, Operations, Contracts, etc. Focus on the essentials and remember that more is not always better. A neatly organized data room signals professionalism and helps buyers (and your advisors) move faster.

6. Tell Your Story

Finally, be ready to articulate what makes your business valuable and where it’s going. If you’re working with a broker, they’ll use your input to write the teaser and build a Confidential Information Memorandum (CIM), which is a detailed deck that tells the company’s story, including financials, team, operations, and growth potential. 

If you’re going direct, you’ll still want a version of this to share with interested buyers, even if it’s just a short narrative with supporting numbers. The good news is: you don’t have to build it alone. Many direct buyers (like HSC) work closely with sellers to shape that story together, helping capture the business’s strengths and vision in a way that resonates with investors and partners. 

Selling your business may only happen once in your life. But with the right preparation, you can enter the process with confidence on your terms, with a story and financial package that reflects the true value of what you’ve built. Preparation not only helps you get a deal done, but it can materially improve your valuation, strengthen your negotiating position, and lead to better overall terms. A little work up front can pay off in a big way when it matters most. 

Key Takeaways

• Clean, well-organized financials and a clear EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) are essential for building trust and speeding up the process.

• Buyers think in multiples of EBITDA because it’s the cleanest way to compare businesses. Showing a strong, well-explained EBITDA puts you in a stronger negotiating position.

• You do not need to be a finance expert. With some upfront work (and possibly help from your accountant), calculating EBITDA is more approachable than it sounds.