How to increase EBITDA before selling: the five moves that raise your price

This is for an owner who plans to sell in the next one to two years and wants the highest price a real buyer will pay. By the end you will know the five moves that raise EBITDA, which ones a buyer's accountant accepts, and what each extra dollar is worth at closing. It pairs with our guide on how to sell a business.

Why EBITDA moves the price twice

A business sells for its earnings times a multiple. For businesses priced over about $2 million, the earnings figure is EBITDA: profit before interest, taxes, depreciation and amortization, adjusted for things a new owner would not pay. Smaller businesses are priced on SDE, which also counts the owner's salary. Our free SDE and EBITDA calculator shows both from your P&L.

The multiple depends on size, industry and risk. In the IBBA and M&A Source Market Pulse report for the fourth quarter of 2025, deals of $2 million to $5 million averaged 4.1 times EBITDA, and deals of $5 million to $50 million averaged 5.5 times. Deals under $2 million were priced on SDE, from about 2 to 3.1 times.

That is why EBITDA moves the price twice. First, every extra dollar of EBITDA is multiplied. Second, a bigger EBITDA can push you into a larger size band, where the multiple itself is higher. If you are going to increase EBITDA before selling, start with the moves below, in this order.

Move 1: Fix your pricing

Pricing is the fastest way to raise EBITDA, and most owners have not touched it in years. A price increase goes almost straight to profit, because your costs do not rise with it.

Three things to do:

1. Raise prices. Look at what you charged three years ago and what your costs have done since. If your prices have not kept up, raise them. Do it in one clear step, with notice.
2. Cut discounting. Pull a report of every invoice with a discount, a free add-on or a waived fee. Set a rule for who may give a discount and how much.
3. Index your contracts. Put an annual increase into every service agreement and retainer, tied to an inflation index or a fixed percentage. A buyer reads that clause as future margin they do not have to fight for.

Make these changes early. A buyer wants to see at least 12 months of results at the new prices, with customers still there. A price rise the month before you list looks like window dressing, and a careful buyer will value you on the old numbers.

Move 2: Cut costs a buyer will believe

Not every cost cut adds to your price. A buyer and their accountant sort your cuts into two piles: cuts that stay cut after closing, and cuts that come back. Only the first pile raises your EBITDA in their eyes.

Cuts buyers believe:

• Vendor renegotiation. Insurance, merchant fees, materials, fuel, phone and internet, uniforms, waste. Get two competing quotes on each and ask your current vendor to match. Put the new terms in writing.
• Unused software. Export your card statements and list every subscription. Cancel the seats nobody uses and keep the cancellation emails.
• Headcount that is truly surplus. A role left over from an old process, or a duplicated job. If the work still has to be done, the cost will reappear, and the buyer knows it.

Cuts that backfire:

• Marketing. Cut it and profit rises this quarter, then leads fall next year. A buyer sees the trend in your lead and revenue numbers and either lowers the price or adds the marketing cost back into their model.
• Maintenance and repairs. Deferred maintenance shows up in the equipment inspection and in the capital expenditure schedule. The buyer prices the repairs you skipped.
• Training, safety and compliance. The same logic. These costs protect future earnings, and a quality of earnings reviewer will normalize them back in.

The rule is simple. If a cost cut would still make sense if you were keeping the business for ten more years, make it. If it only makes sense because you are leaving, do not.

Move 3: Build recurring revenue

Buyers pay more for revenue that arrives without a new sale. Service agreements, memberships, maintenance plans and monthly retainers all do this. We wrote about this in what buyers pay a premium for.

Why it matters to the buyer: recurring revenue is easier to forecast, it lowers the risk that the business falls apart when you leave, and a lender can count on it when sizing the loan. Together those push the multiple toward the top of your size band.

How to add it in 12 to 24 months:

• Home services. Sell an annual maintenance plan to every customer you serve this year. Track the number of plans and the renewal rate from the first month.
• Agencies and B2B services. Move project clients onto a monthly retainer with a defined scope.
• Healthcare and memberships. Offer a membership for patients or clients who pay cash, with a set of included visits.

Keep a simple schedule of every agreement: customer, start date, monthly amount, renewal date. A buyer's accountant will ask for exactly that list.

Move 4: Document your add-backs properly

Add-backs are costs on your books that a new owner would not pay, so they are added back to profit. Done well they are real EBITDA. Done badly they are the first thing a buyer cuts. Our glossary entry on add-backs covers the full list; here is what matters before a sale.

The three big ones:

• Owner salary above market. If you pay yourself $300,000 and a hired general manager would cost $150,000, the difference is an add-back. You need evidence of the market rate: job postings for the role, a recruiter's letter, or a salary survey for your area. The buyer will check it against what they would pay.
• One-time costs. A lawsuit, a flood, a failed product line, a one-off consulting project. Each needs the invoice, the date, and a sentence on why it will not recur. A "one-time" cost that appears in two of the last three years is not one-time.
• Personal expenses. Family on payroll who do not work, the personal vehicle, travel that was a holiday, the home internet. Each needs the ledger line and a note. Then stop running them through the business.

Who checks this: a quality of earnings report. For larger deals it is no longer optional. CliftonLarsonAllen explains that under SBA SOP 50 10 8.1, from October 1, 2026, an SBA lender must obtain its own quality of earnings report on business acquisitions with a purchase price of $3 million or more, and a report prepared for the seller does not count. Assume a professional will test every adjustment against bank statements.

A practical standard: for each add-back, keep one folder with the ledger entries, the invoices or payroll records, and a one-paragraph explanation. If you cannot fill the folder, drop the add-back. The result is your adjusted EBITDA.

Move 5: Use AI where it cuts real cost

AI and automation raise EBITDA only when they remove a cost that was really there, or recover revenue that was really leaking. At Acquisitions.com we install AI agents in businesses to cut costs and raise valuation; the work we see pay off sits in five places. The detail is on our AI page.

• Scheduling and booking. An agent answers calls and messages, books the job into the calendar and sends reminders. The saving is front-desk hours, plus the after-hours appointments you no longer miss.
• Dispatch and routing. For field businesses, software that plans routes and assigns jobs reduces drive time and overtime. The saving is fuel and labor hours.
• Accounts receivable collections. An agent sends invoice reminders, follows up on overdue accounts and reconciles payments. The result is cash that arrives sooner and fewer write-offs.
• Bookkeeping. Automated categorization, bank reconciliation and month-end reports cut the hours your bookkeeper or outside accountant bills.
• Customer replies. Drafted responses to common emails and messages, reviewed by a person, cut the time your staff spend on repeat questions.

Two warnings. First, do not claim a saving before it is on the P&L; a buyer values what you have done, not what the software could do. Second, keep the before-and-after numbers: hours per week, overtime, days sales outstanding, write-offs. Those records turn an AI story into an add-back the buyer accepts.

A worked example: before and after

This is an illustration with round numbers, not a real business. The multiple is the IBBA and M&A Source Q4 2025 average for deals of $2 million to $5 million, 4.1 times EBITDA. Your own multiple will differ.

Where the extra $150,000 of EBITDA came from in this example:

Notice that the owner did not need a new product or market; most of the gain came from pricing and from proving what was already there. Every dollar of EBITDA became $4.10 of price. If the same business grew past $5 million in value, the IBBA average multiple for that band was 5.5 times, so the next dollars would be worth more still.

The 12-to-24-month plan

Work in this order. The buyer wants a full year of proof.

1. Months 1 to 3. Raise prices and index your contracts. Cancel unused software. Get competing vendor quotes. Start the add-back folders.
2. Months 3 to 6. Launch the maintenance plan, membership or retainer. Put AI on scheduling and collections first; they pay back fastest and leave a clear record.
3. Months 6 to 12. Automate the bookkeeping and close the books every month. Stop personal expenses through the business. Hire or name the manager who will replace you, so the salary add-back is real.
4. Months 12 to 18. Review the results. Drop any cut that came back. Have an accountant test your add-backs the way a buyer's would.
5. Months 18 to 24. Prepare the information memorandum with 12 months of clean numbers at the new prices, and go to market.

If you want help deciding which moves fit your business, book a call. Acquisitions.com advises owners on selling for a higher price and on the AI work that gets them there.