As we approach our target exit date, should we continue investing in capital expenditures and upgrading our technology, or should we halt spending to maximize our near-term EBITDA?

Question

Tyler Smith · Accepted Answer

Starving your business of capital expenditures and technology upgrades to artificially boost near-term EBITDA is a strategy that almost always backfires during due diligence. Sophisticated buyers are highly sensitive to technology debt and deferred maintenance. If they see that your software is outdated, your machinery is failing, or your operational systems are non-existent, they will simply deduct the cost of those necessary upgrades directly from your purchase price at the closing table. The correct approach on your exit runway is to continue making strategic investments that drive operational efficiency and scalability. Every dollar spent on modernizing your operations should clearly improve your margins, reduce labor costs, or accelerate your delivery speed. By demonstrating that your technology stack and physical assets are modern, optimized, and fully capable of supporting future growth, you eliminate a major negotiation point for the buyer. This proactive investment strategy justifies a premium valuation multiple and proves that your business is geared for future expansion rather than near-term survival.