Preparing for Sale: How to Improve EBITDA and Attract Buyers

By Adrian Lawrence FCA, founder of NED Capital · Part of the Board Governance Hub

When an owner decides to sell, the instinct is to focus on the numbers — grow revenue, trim costs, lift profit. That matters, but it is only half the picture. Buyers do not simply pay for this year’s earnings; they pay a multiple of them, and that multiple depends on how sustainable, credible and low-risk those earnings appear. It also depends on what due diligence uncovers about how the business is run — and that is where the board, and particularly its non-executive directors, make a difference that owners often underestimate.

This guide looks at preparing for sale from the board’s perspective: how to improve EBITDA in a way buyers reward, how governance readiness affects value, and how the right non-executive directors help attract buyers and protect the price.

EBITDA and Why Buyers Focus On It

EBITDA — earnings before interest, tax, depreciation and amortisation — strips out financing and accounting effects to show what a business earns from its core operations. Buyers favour it because it allows a cleaner comparison of operating performance between businesses, and because enterprise value in most private-company sales is set as a multiple of EBITDA. Improve EBITDA, and you improve both the base the multiple is applied to and, if the improvement looks durable, potentially the multiple itself. But the crucial point owners miss is that buyers do not take the reported figure at face value: they test it. FD Capital’s guide to EBITDA, adjusted EBITDA and exit valuation sets out the mechanics in detail.

Improving the Quality of EBITDA, Not Just the Number

The most valuable work before a sale is improving the quality of earnings. A buyer’s advisers will produce a “quality of earnings” analysis that separates sustainable, recurring profit from one-off or non-operational items. This is where adjusted, or normalised, EBITDA comes in: legitimate add-backs — the owner’s above-market salary, genuinely exceptional costs, discontinued lines — can properly increase the figure a buyer values, but only if they are well-evidenced and defensible. Aggressive or poorly-supported add-backs do the opposite: they erode a buyer’s trust in the whole set of numbers and invite a wider discount. The board’s job is to ensure the adjustments presented are credible and documented, so that EBITDA survives diligence intact.

Durability matters as much as level. Recurring revenue, diversified customers, long contracts and predictable margins all make earnings look lower-risk and command a higher multiple. Lumpy, concentrated or one-off-dependent earnings, however high this year, invite scepticism. Genuine operational improvements — tightening margins, removing loss-making activity, building recurring revenue — raise EBITDA in ways a buyer rewards, unlike short-term cost-cutting that a buyer will see through and reverse in their own model.

Why Buyers Look at the Board Before They Buy

A serious acquirer is not only buying earnings — they are buying a business they will have to run, integrate or back. What they find when they examine how it is governed materially affects both their appetite and their price. A business with a credible, independent board, functioning committees and disciplined decision-making reads as lower-risk and better-run; one where all authority rests with a single owner-manager, with no independent oversight and thin governance, reads as riskier and more dependent on one person. That risk shows up directly in the valuation, and sometimes in whether a deal happens at all. Investors and acquirers increasingly look for board strength as a signal before they commit — a point explored in our piece on why investors look for board strength before funding.

Governance and Diligence Readiness

Due diligence is where value is won or lost, and much of what it tests is governance. Buyers and their advisers will want clean, complete board minutes; a functioning audit committee or at least evidence of proper financial oversight; documented internal controls; clear records of decisions, related-party transactions and contracts; and no unpleasant surprises. Gaps here do not just slow a deal — they create uncertainty that buyers price in as risk, and they hand the buyer’s side leverage to chip the price. A board that has kept its governance house in order removes that leverage. Preparing these records well in advance — rather than scrambling once a buyer is at the table — is one of the clearest ways a board adds value ahead of a sale, and a NED with transaction experience knows exactly what diligence will look for.

De-risking the Business for a Buyer

Much of what makes a business saleable, rather than merely profitable, is the removal of risk. Owner-dependence is the classic problem: if the business cannot run without its founder, a buyer sees a fragile asset and prices accordingly. Reducing key-person reliance by building a capable management team and a functioning board, diversifying a concentrated customer base, formalising contracts and processes, and demonstrating that the business has an independent governance layer beyond the owner — all of these make the company less risky to acquire and therefore more valuable. This is board-level work, and it is precisely the kind of oversight and challenge that experienced non-executives bring. A strong board does not just monitor the business; it makes the business into something a buyer can confidently take on.

Assembling the Right Board for an Exit

Owners who are serious about a sale often strengthen the board well ahead of the process, bringing in a non-executive director or chair with genuine transaction and exit experience. Such a person adds value in several ways at once: they lend the board the credibility buyers look for, they help present and defend EBITDA and the equity story, they anticipate what diligence will probe and get ahead of it, and they bring the discipline of having been through sales before. For private-equity-backed and growth businesses in particular, the right board addition ahead of an exit can pay for itself many times over — which is why we work with owners and investors on NEDs for private-equity boards and on the governance of a sale through our mergers and acquisitions and exit governance services.

Preparing for sale well is a board-level discipline as much as a financial one. Improving EBITDA quality, getting governance diligence-ready, de-risking the business and assembling a credible board are the things that attract the right buyers and protect the price — and the right non-executive director is central to all of them. At NED Capital we appoint board-level directors with the transaction experience to help owners and investors prepare for a successful exit, and every search is led personally by Adrian Lawrence FCA, a Fellow of the ICAEW and former listed-company finance director. This article is general information, not financial, tax or legal advice.

NED Capital | Sister practice of FD Capital | ICAEW practising certificate held by Adrian Lawrence FCA. This article is general information, not financial, tax or legal advice.