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Thinking about selling your business? Before you start slashing costs—or investing heavily—watch this first. Kirk Michie breaks down what to spend on, what to skip, and how each choice can impact your valuation and deal terms.

In this video, Kirk explains a common question founders face during exit planning: Should you cut expenses to boost EBITDA, or spend to show growth potential? The answer isn’t one-size-fits-all. Kirk outlines a smarter approach to operational decisions before a sale—like whether to upgrade systems, hire sales staff, or delay capital expenditures. More importantly, he explains how buyers actually view these decisions and why some well-intentioned moves could backfire during diligence or valuation discussions.

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How to Think About Pre-Sale Expenses in Exit Planning

If you’re prepping your business for sale, it’s tempting to either pour resources into growth or cut aggressively to inflate profitability. But both strategies can be short-sighted if they don’t align with how buyers evaluate value. Strategic expenses like new CRMs or sales hires should only happen if you’d make those investments regardless of a sale—otherwise, they may just raise red flags or hurt EBITDA at the wrong time.

On the flip side, avoid large one-time costs right before going to market. Buyers rarely give full credit for adjusted EBITDA or “normalizations” that rely on too much explanation. Your best bet? Run the business like you’re going to keep it—and let your advisor handle how the growth story is told in your materials.

Transcript

What Expenses Should You Incur or Cut Before Selling?
Kirk Michie, Candor Advisors

Hey founders, are you wondering what to invest in—or cut—as you move toward selling your business?

You might be thinking: should I upgrade systems, hire more salespeople, or cut expenses to show stronger EBITDA? These are smart questions—but there’s nuance.

First, run the business like you’re going to keep running it. Don’t make decisions just because you plan to sell. If you install an expensive ERP, change your CRM, or hire a team just to “look more professional,” a buyer will spot that—and may view it as gimmicky.

Make smart operational decisions only if you’d do them anyway. Your advisor can include your growth vision in the CIM or pitch deck without you having to spend first and justify later.

Also, avoid moves that hurt EBITDA right before a sale. If that investment lowers your earnings, you might see a lower multiple—even if your intentions were good.

If you do have a big one-time cost, make sure it’s properly amortized. Otherwise, your adjusted EBITDA will take a hit at exactly the wrong time.

On what to cut: yes, you’ll get credit for “add-backs” like personal expenses, legal settlements, or owner-specific perks. But be cautious with large capital expenditures just before going to market. You’ll argue they were necessary, but buyers often won’t care. They’ll focus on your trailing EBITDA—and resist your normalization logic.

Talk to your advisor before making any major financial decisions. Don’t assume buyers will see it your way. They rarely do.

Glad you’re asking these questions. Stay tuned for more answers soon.