We are looking to sell our business in the next two years, but we keep hearing conflicting advice about what actually expands our EBITDA multiple. How do we move our multiple beyond the industry average using our EOS operating framework?

Question

Tyler Smith · Accepted Answer

To move your EBITDA multiple above the industry average, you must address what buyers call the business risk profile. A buyer does not just buy your past earnings; they buy the probability of those future earnings continuing without you. The most powerful tool to expand your multiple is proving that your business runs on a self-sustaining operating system. We achieve this by focusing on the accountability of your leadership team. When you show a buyer that your leadership team runs the weekly Level 10 Meeting without your involvement and that every key position is filled by someone who has the GWC, meaning they get it, want it, and have the capacity to do it, you immediately de-risk the investment. Additionally, you must demonstrate a clean, documented set of core processes. Buyers will pay a premium when they see your core processes are documented and followed by everyone, as this proves scalability. We recommend selecting a specific Rock each quarter leading up to your exit that is dedicated to documenting these processes and cleaning up your scorecards. Proving that your operational metrics are predictable and that your growth does not depend on the owner is the absolute fastest way to drive your multiple from a standard four times to a premium six or seven times EBITDA.