How to increase your company’s value before selling

How to increase your company’s value before a sale: Practical 12–24 month roadmap to boost Ebitda, increase multiple, and maximize net sale proceeds

Selling a company is often the single most significant financial milestone for an entrepreneur or a family-owned group. And yet, it is also the moment when the most value is lost for a reason that is both common and avoidable: the company is not prepared to be assessed (and acquired) as an investment-grade asset.

In real-world M&A, the final price rarely depends only on “how well the business is doing” or how much it invoices. It depends on four questions a sophisticated buyer will try to answer as early as possible:

1. How much sustainable profit does the company truly generate (normalized EBITDA)?
2. What risks exist—and how likely is performance to drop after closing (transferable value)?
3. What credible growth trajectory is in place, and how does it translate into the multiple?
4. How much cash will the shareholder actually receive after net debt and working capital adjustments (the final cheque)?

The typical gap between the “value” an owner feels and the value the market pays comes from this difference in mindset. The owner sees effort, relationships, reputation, and sacrifice. The buyer sees future cash flows with uncertainty—and uncertainty is discounted.

This guide provides a practical framework to answer the question “how do I increase the value of my company?” with a 12 to 24 month horizon (up to 36 months if you aim for a deeper transformation). The goal is not only to sell at a higher price; it is to sell better: less friction, more buyer competition, fewer last-minute retrades, and fewer post-sale liabilities.

The real mechanics of price: EV, Equity Value, and the “bridge” that determines the cheque

The first key mental shift is to separate the value of the business from the money the shareholder receives.

Enterprise Value (EV) represents the value of the operating business—the “cash-generating machine.” In the middle market it is often approximated as:

EV = Normalized EBITDA × Multiple

But the shareholder does not take EV home. What they receive is Equity Value, which is obtained after adjusting for net financial debt and the working capital level agreed at closing.

In other words: you can have a high EV and still receive less cash if you reach closing with high net debt—or if you “hand over” hidden cash through excess inventory or uncollected receivables.

This matters because many companies focus on “increasing EBITDA” and overlook two frequent sources of value leakage right at the end:
(i) the working capital adjustment, and
(ii) contingencies discovered in due diligence that translate into price chips, escrows, or earn-outs.

Why growth changes the multiple (and why “growing” does not always add value)

Here is one of the most powerful (and most misunderstood) ideas in valuation: a company that does not grow is not valued like a company that grows well. Even with the same current EBITDA, the market will often pay different multiples because the multiple is ultimately the price of two things: risk and expected growth.

How growth turns into a higher multiple

A buyer pays more for a growing company for three reasons:

• Visibility of future EBITDA: if the business grows consistently, the buyer can justify that EBITDA in coming years will be higher than today—and pay a higher multiple for that “EBITDA ramp.”
• Strategic optionality: growth tends to open routes (new geographies, new lines, synergies, bolt-ons) that a financial or strategic buyer can accelerate.
• Lower competitive fragility: in many sectors, a stagnant company is more vulnerable (price pressure, talent loss, margin erosion). A growing company “proves” product-market fit, commercial capability, or a defensible advantage.

That said, growth only increases the multiple if it is credible and profitable. If you grow by cutting prices, increasing complexity, consuming cash, or inflating working capital, you may be increasing risk. More risk often means a lower multiple—even if revenue is rising.

The quality of growth: the question that decides valuation

In a transaction, it is not enough to say “we grow 20%.” The buyer will ask: why, at what margin, with what cash profile, and is it repeatable?

Growth that typically earns a “multiple premium” is supported by:

• Recurrence (contracts, subscription, maintenance, retainers) or high repeat purchasing,
• Stable or improving margins (pricing power, mix, efficiency),
• Diversification (not depending on a single client/sector),
• An organization capable of absorbing volume without breaking quality or control.

The last closed year and “current trading”: what truly drives negotiations

Many entrepreneurs assume valuation is set using the last annual accounts. In practice, the last closed fiscal year is an important base—but price moves significantly based on two elements:

1. The last closed year as a verifiable anchor (used to normalize EBITDA).
2. The year-in-progress and current trading as confirmation that the business maintains—or accelerates—its trajectory.

Why the last closed year matters: it is the anchor the buyer considers auditable and comparable. If it reflects “normal” performance, it helps defend value. If it was exceptional (very high or very low), the buyer will push to adjust to a “normalized” level and request evidence.

Why current trading can raise or lower the price: current trading is the thermometer. If the year-in-progress confirms growth, margins, and cash conversion, the buyer may value the company using a figure closer to a run-rate (annualizing a strong YTD) or LTM (last twelve months), rather than staying anchored to the last fiscal year.

If current trading deteriorates, the buyer tends to re-trade: renegotiate price, introduce an earn-out, or tighten protection terms. This can happen even in good businesses—because nobody pays as if the company were still at a level it no longer is.

What a “current trading pack” is (and why it protects value): a prepared company goes to market with a clear, defendable pack: consistent monthly closes, a bridge from last closed year to YTD, margin drivers (mix, pricing, costs), working capital evolution, and commercial evidence (pipeline, contracts, churn/retention, backlog).

This is where internal organization and the quality of the finance team make a direct difference—hence why an interim/outsourced CFO approach can have tangible ROI: it does not only improve management, it improves your ability to defend value when the buyer challenges current trading.

Transferable value: organization and the management team as “price multipliers”

A buyer does not pay only for results; they pay for continuity. Continuity is built through organization and a management team that can sustain the business without dependency on the founder. If the owner is simultaneously the Head of Sales, the Head of Operations, and the person solving all critical issues, the buyer sees key person risk. That risk typically translates into:

• Lower multiples,
• Earn-outs,
• Retentions, representations, and escrows,
• Or, in some cases, deals falling apart during due diligence.

Professionalizing the organization is not about adding bureaucracy—it is about installing a replicable system: monthly reporting, key KPIs, minimally documented processes, clear responsibilities by function, and a second line with real decision-making capacity.

Management team quality has a meaningful impact on both deal success and price: if the buyer does not trust the team, they perceive higher risk, reflect it in the value, or simply walk away.

Levers to increase your company’s value

Lever 1: Normalized EBITDA and earnings quality

Higher EBITDA increases value because it is multiplied by the multiple. But in M&A, the buyer pays for the EBITDA they believe is sustainable and defendable.

EBITDA normalization (without “window dressing”): in SMEs, accounts often blend personal, discretionary, or non-recurring items. Normalization aims to show the true economic profitability a buyer would receive. Typical add-backs relate to off-market compensation, non-operating costs, and one-offs. The key is evidence: if it cannot be documented and explained, the buyer will likely remove it.

Margin and pricing power: growth with margin is worth more than growth achieved through discounting. Defending margin requires knowing profitability by customer, reviewing cost-to-serve, and implementing a pricing strategy (indexation, periodic reviews, mix management).

Recurrence: recurring revenue raises the multiple because it reduces uncertainty. If the model is transactional, many companies create recurrence through maintenance, consumables, services, contracts, retainers, or multi-year agreements.

Lever 2: Reduce risk to lift the multiple (especially concentration risk)

Commercial risk penalizes both the multiple and the deal structure. Customer concentration is the most common example: the more the business depends on one or two customers, the more likely a buyer will demand an earn-out or reduce price.

The real solution is to dilute concentration through growth across customers and sectors. If time is short, the focus shifts to mitigation: long-term contracts, operational integration, institutionalizing the relationship (so it does not depend on the founder), and increasing switching costs.

Lever 3: The final cheque is won (or lost) in the balance sheet and working capital

Many deals are re-traded at the end due to net debt and working capital adjustments.

• Working capital: if you close with excess inventory or receivables above the agreed “normal level,” the buyer deducts it from the price.
• Net debt: a tight debt structure or off-balance commitments can trigger discounts or retentions.
• Non-operating assets: often more efficient to separate or treat independently (where applicable).

A practical tool to anticipate buyer scrutiny and reduce late-stage renegotiations is a Vendor Due Diligence (see link at the end).

Preparing the tax structure: a holding company as a lever (vs. selling as an individual)

Tax does not create operating value, but it can materially change the net proceeds the seller keeps. That is why serious sale preparation should include early structuring—especially for family-owned groups.

In general (and always depending on the specific case), selling shares as an individual is not taxed the same way as selling through a corporate holding structure. In Spain, where the seller is a company, a partial participation exemption regime may apply to capital gains on the sale of shareholdings, subject to conditions and limitations. This can be particularly relevant where the objective is to reinvest and manage wealth more efficiently post-sale.

Creating or reorganizing a holding structure is not a last-minute exercise: it requires time, correct design, and analysis of requirements, anti-abuse considerations, and implementation costs. It is also not always optimal if the seller needs immediate personal liquidity or has specific constraints.

A realistic 24-month roadmap to increase value

A useful roadmap is not an endless checklist; it is a sequence that creates evidence of improvement.

• Months 1–6: Diagnosis and order. Initial EBITDA normalization, risk review (legal/tax/labour/contractual), document clean-up, and minimum viable monthly reporting. Define KPIs and prepare the backbone of the current trading pack.
• Months 7–18: Execute the levers. Margin improvement, working capital discipline, progress on recurrence and diversification, institutionalizing key customer relationships, and strengthening the management team (second line). Where relevant, implement management retention/incentives.
• Months 19–24: Sale preparation and a competitive process. Equity story, information memorandum, robust data room, long list of buyers, and an orderly go-to-market process.

FAQs:  how to increase your company’s value before selling

What increases value more: EBITDA or the multiple?

It depends on the starting point. Increasing EBITDA has a direct effect, but lifting the multiple usually comes from reducing risk and proving credible growth. The best outcomes combine both: stronger EBITDA and a stronger risk profile (organization, team, recurrence, diversification).

How much does growth influence the multiple?

A lot—if it is high-quality growth. A company that grows with margin, cash conversion, and processes can justify higher multiples because the buyer is effectively buying an EBITDA ramp. Growth that consumes cash or erodes margin can increase risk and hurt the multiple.

Why is the last closed year so important?

Because it is the verifiable base to normalize EBITDA and compare trends. If the last year was “abnormal,” the buyer will push to adjust to a sustainable level and ask for supporting evidence.

What is current trading and why can it change price?

It is the performance of the year in progress (sales, margin, EBITDA, cash) and often determines whether the last closed year represents the “new normal.” Strong current trading can support LTM/run-rate valuation; weak current trading often triggers re-trades or earn-outs.

When should you start preparing for a sale?

Ideally 12 to 24 months before. You need time to implement improvements, show trend evidence, and reach the market with clean documentation and credible reporting.

How does internal organization affect price?

Organization reduces uncertainty. Monthly reporting, clear KPIs, minimal documented processes, and defined responsibilities signal control, accelerate due diligence, and reduce re-trades. That is reflected in the multiple and in fewer closing deductions.

What does a buyer look for in the management team?

Continuity: can the team run operations, sales, and finance without the founder? A strong team reduces key person risk, improves the multiple, and lowers reliance on earn-outs.

What is Vendor Due Diligence and why is it helpful for the seller?

A pre-sale diligence review commissioned by the seller to identify and fix issues before going to market. It reduces surprises, accelerates the process, and protects price against last-minute deductions.

Is it a good idea to set up a holding company before selling?

It can be, especially for tax efficiency and reinvestment, but it depends. It requires planning, meeting conditions, and avoiding improvised structures. The key is to work on it early with specialist advice.

What should be the first step if I plan to sell in 12–36 months?

Run a serious diagnostic with a clear “value levers map”: normalized EBITDA, risks, growth, current trading, working capital, and management readiness—then build a 6–18 month plan that truly moves price.

How Maraz can help you increase your company’s value before a sale: turn growth into multiple (and multiple into cheque)

In a sale, what makes the difference is not generic advice—it is an executable plan and a well-run process. In practice, Maraz typically creates value across four fronts directly linked to price:

• Diagnostic and valuation with a “value levers map.” Not just a number: what moves EBITDA, what moves the multiple (including growth), and where value leaks between EV and the final cheque.
• Financial professionalization and current trading. Monthly reporting, bridges, margin/cash control, and a defendable current trading pack (often via an outsourced/interim CFO model).
• M&A preparation and execution. Equity story, information memorandum, data room, buyer list, and a competitive process to maximize tension on price.
• Vendor Due Diligence to reduce friction. Anticipate issues and prevent value-destructive renegotiations at the end.

Value is not determined by what you know about your business; it is determined by what the buyer can understand, verify, and confidently project. That is why the best exits are not only achieved by companies with strong EBITDA—but by companies with credible growth, robust current trading, strong organization, and a management team that signals continuity.

If you are considering a sale in the next 12–36 months, the moment to maximize price is not when you already have an offer on the table. It is now—while you can still strengthen the structure, improve data quality, plan tax properly, professionalize the management team, and go to market with a company that is “buyable” from day one.

Javier de Rojas Roca de Togores

Partner - Maraz Corporate Finance