The Interview That Never Happened — Part III: The Numbers Were Never the Point
The metrics that matter when selling are the same ones that should have guided you all along
Joe’s third question sounds tactical: “What are the key KPIs and numbers an entrepreneur needs to be paying attention to when it comes to getting their business ready for sale?” It’s the kind of question that invites a checklist, but the real answer resists that. There are no special KPIs for selling a business. The numbers that matter at the end should already be the numbers you live by while you are building it. If they’re not, the problem isn’t the sale—it’s the business.
Key Performance Indicators (KPIs) are quantifiable measures used to evaluate an organization’s success in reaching strategic and operational goals.
Value Is Not a Surprise
In our case—a rigid plastic packaging company without much private IP—the math was relatively straightforward. Value was roughly a multiple of EBITDAR, minus total debt. But even that required interpretation. To get to a real debt number, we had to convert operating leases into capital leases on paper. Only then could you see the true obligation structure. There was also a simpler rule of thumb floating around: about one turn of total turnover. None of that was particularly mysterious. What mattered was not the formula. It was knowing it early.
Long before the business was in a position to sell.
Long before I was even thinking about selling.
That timing changes how you operate. You’re no longer reacting to a future event. You’re shaping it.
EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent/Restructuring) is a financial metric used to evaluate a company's core operating performance by excluding non-operating costs like financing, taxes, heavy rent, and restructuring expenses. It is crucial for comparing companies with different leasing structures or those undergoing restructuring.
Intellectual property (IP) refers to creations of the mind—such as inventions, artistic works, designs, symbols, names, and images—used in commerce. It allows creators to earn recognition or financial benefit, fostering innovation by securing legal rights over their work. Key types include patents, copyrights, trademarks, and trade secrets.
Learning the Language Before You Need It
Here’s the part that mattered more than any KPI: I was talking to potential buyers before I ever intended to sell. Not casually. Not hypothetically. Real conversations. Real numbers on paper. Real interest. I listened, asked questions, and paid attention to how they thought—what they cared about, what they ignored, how they constructed value from the same data I was living inside of every day.
And something became clear.
They all spoke a similar language.
Different firms, different angles, different motivations, but when it came to value, the frameworks converged. That gave me clarity not just on what the business was worth in that moment, but on what would make it worth more later. You’re no longer guessing what matters. You’re aligning with it.
The KPIs That Always Mattered
Beyond the final valuation math, there are the operating KPIs—the ones any serious buyer will dig into and the ones you should already be using to run the business. For us in manufacturing, that included SG&A as a percentage of total turnover, equipment utilization, material margins, and customer distribution.
Selling, General, and Administrative (SG&A) expenses are a company’s indirect operating costs—often called overhead—that are not directly tied to producing goods or services. Found on the income statement, key examples include marketing, sales staff salaries, rent, and legal fees. It is calculated by adding all non-production, operating expenses for a specific period.
None of these are “exit metrics.”
They are operational truth.
They tell you where your risks are, where inefficiencies are hiding, and where dependencies could become vulnerabilities. They show you where to focus if you want to improve the business structurally, not just cosmetically. A buyer looks at these to understand what they are inheriting. You should be looking at them to understand what you are building.
There’s a dangerous idea that you can fix the numbers when it’s time to sell. You can’t. If your financials are a mess and your operational data is incomplete or inaccessible, trying to clean it up right before a sale doesn’t work. At best, it looks rushed. At worst, it looks dishonest. Buyers don’t just look at where you are—they look at how you got there. They want to see history, progression, and decisions reflected over time. They want consistency, not reconstruction.
Because if you can rewrite your numbers, so can they—and they will.
A good buyer will dig deep. They will validate everything you give them. If needed, they will build their own analysis from the ground up, independent of yours. We did exactly that when we were acquiring companies, and because of it, we had very little buyer’s remorse. Not because everything was perfect, but because nothing was hidden.
The Real KPI
If you had to reduce all of this to one metric, it wouldn’t be EBITDAR, margins, or utilization rates. It would be this:
Do you understand your business as well as a buyer will?
Because if you don’t, they will close that gap for you—and they will price it accordingly.
🌱 Seed Thought: The numbers that matter at the moment of sale are not created in that moment. They are revealed. And if you’ve been paying attention all along, they won’t surprise you.
