Owners tend to think about sale value as a multiple, and about the multiple as something you argue over at the point of sale. In reality most of it was settled years earlier, by structural things about the business that can’t be changed quickly.
Owner dependence is usually the single biggest discount. If the revenue rests on relationships you personally hold, if the important decisions all route through one person, if the business would visibly change the day you walked out, a buyer prices that in. And it isn’t a small adjustment.
Customer concentration works exactly the same way. A business where one client is thirty percent of revenue is a lot riskier than one where the biggest is eight percent, and the price reflects it. Bringing concentration down means winning new business over several years. You cannot do it inside a sale process.
Earnings quality is the third one. A quality-of-earnings review normalises your reported EBITDA. Out come the one-off items. Owner compensation gets adjusted to market. Deferred maintenance and understated capital needs get flagged. If your records are informal, or personal expenses have been running through the company, or the accounting basis wobbles between years, expect substantial downward adjustments. And every one of them gets multiplied.
Then there’s structure. Your entity form, the ownership arrangements and any prior transactions all affect what you keep after tax, and some structures create real friction at closing. Changing structure is straightforward years ahead. Once a transaction is underway it’s expensive, and sometimes impossible.
What all that adds up to is this: preparing for an exit is a multi-year project, not a workstream you spin up when a buyer calls. Three to five years is a realistic runway. Long enough to reduce how much depends on you, spread the customer base, build a clean earnings history and sort the structure out. Start when the buyer appears and you’re negotiating over a number that was fixed a long time ago.