We are three years from a sale and need to upgrade our core technology, but we are hesitant to spend capital so close to an exit. How do we decide which operational investments to make during our runway to ensure a higher return at sale?

Question

Tyler Smith · Accepted Answer

Stopping all capital expenditure because you are planning an exit is a major mistake. Buyers can spot a starved business from a mile away. If your technology is outdated or your equipment is failing, a buyer will simply deduct the cost of those deferred upgrades from your purchase price.

To make smart investment decisions on your exit runway, you must evaluate every expense through the lens of return on investment and scalability. If a technology upgrade will immediately improve your margins, reduce key-person dependency, or make your operations more repeatable, you should make the investment.

Use your V/TO to align these capital decisions with your three-year vision. Focus your spending on tools that institutionalize your processes and remove friction from your client delivery.

A modern, efficient operating system that runs on up-to-date technology is highly attractive to buyers because it requires no immediate capital outlay from them post-sale. By continuing to invest in your business, you prove that the company is on a growth trajectory, allowing you to command a premium valuation.