When business owners begin to think about selling, EBITDA quickly becomes the focal point. It is the number buyers reference, advisers quote, and headlines reduce transactions to: “X times EBITDA.”

EBITDA matters, but it is often misunderstood. Two businesses with identical EBITDA can achieve very different outcomes in a sale process. The difference is rarely the headline profit figure. It is the quality, sustainability, and risk attached to that profit.

In practice, EBITDA opens the door to a valuation discussion. What determines value is everything that surrounds it.

Beyond the Headline: Assessing the Quality of Earnings

Buyers are not purchasing last year’s earnings in isolation. They are assessing whether those earnings will continue, whether they can grow, and how dependent they are on specific people, customers, or circumstances. A business with slightly lower EBITDA but predictable, repeatable earnings will often command a higher multiple than one with a larger but less reliable profit base.

A key focus is the quality of earnings. Buyers look closely at whether profits are underpinned by normal trading activity or inflated by one-off events, temporary cost savings, or owner-specific decisions. Clean, well-explained earnings reduce perceived risk and increase buyer confidence. Profits that require significant adjustment or explanation tend to weaken negotiating positions and invite value erosion later in the process.

Revenue visibility plays a major role in this assessment. Businesses with recurring or repeat income, long-standing customer relationships, and clear forward pipelines are generally viewed as lower risk. Where revenue is irregular or highly project-based, buyers are more cautious. This caution is amplified when customer concentration is high. If a small number of customers account for a significant proportion of revenue or profit, buyers will inevitably factor this risk into valuation or deal structure.

The Transferability Trap: Reducing Owner and Operational Dependency

Another critical consideration is owner dependency. Many owner-managed businesses perform well precisely because of the founder’s involvement, but this can become a constraint in a sale. Buyers want to understand whether the business can operate effectively without the owner day to day. Strong management teams, clear delegation, and documented processes demonstrate that the business is transferable, which materially improves both value and deal certainty.

Operational maturity also influences outcomes. Robust financial reporting, reliable management information, and scalable systems give buyers confidence that the business is well controlled and capable of growth. These factors may not directly increase EBITDA, but they significantly reduce execution risk, which buyers reward through stronger pricing and cleaner deal structures.

De-Risking the Deal: Proving Future Potential

Finally, buyers place value on future potential as well as current performance. A credible growth story, supported by evidence rather than aspiration, can materially influence valuation. This might include pricing opportunities, expansion into new markets, product development, or operational efficiencies. Where buyers can clearly see how value can be created post-acquisition, they are often willing to pay more upfront.

For sellers, the implication is clear. Focusing solely on maximising EBITDA can lead to misplaced confidence and late-stage surprises. In many cases, reducing risk, improving clarity, and strengthening the foundations of the business delivers a better outcome than chasing short-term profit growth.

EBITDA gets buyers interested. Quality, sustainability, and risk determine what they are willing to pay, and how certain that value really is. For business owners considering a sale, the most valuable question is not how to increase EBITDA, but how to make the business easier, safer, and more attractive to acquire.