Two Canadian software companies each earn about the same EBITDA. One sells for a price its founder is proud of. The other draws offers that barely clear what the owner thought was the floor. Nobody made a mistake in the arithmetic. The buyers simply saw two very different businesses behind the same number.
I have seen this from both chairs: as the founder whose company was bought by a private equity group, and later as the person advising founders on what a buyer is really paying for. EBITDA is where the conversation starts. It is rarely what decides the price.
1. How much of next year's revenue already exists
A buyer is paying for future earnings, so the first question is how much of next year you already have. Subscription revenue, multi-year support contracts and long-standing customers who renew without being chased all count. Project revenue that has to be won again every quarter counts for less, however good this year looked.
This is one of the places a founder can make real progress. In my workshops I tell owners that getting a meaningful share of revenue onto recurring terms, say 30% where there was little before, can be worth a turn or two on the multiple. That will not hold for every company, but the direction is reliable.
2. Whether the growth story is believable
In technology, a buyer is buying the next five years as much as the last three. A good growth story is specific: which customers you will win, with which product, through which channel, and what it costs to get there. It should already be visible in the numbers, in a pipeline that converts, a product that expands within existing accounts, or a market you have only started to reach.
A forecast that suddenly bends upward the year you go to market reads as a sales document, and buyers discount it accordingly. A plan you have been running for two years, and hitting, is worth far more than a better-looking one written for the sale.
3. How much of the company walks out with you
If the founder still closes every enterprise deal, signs off every release and holds the key customer relationships, the buyer is not sure what it is acquiring. It will protect itself with structure: more of the price tied to an earnout, a longer stay for you, or a lower number.
The fix is not quick, which is why it belongs early in the plan. Put a sales leader in front of the big accounts. Let your senior engineers own the roadmap. Take a long holiday and see what happens. A company that keeps growing while you are away is a different asset from one that pauses.
4. Whether the product and the team will carry on
Buyers look hard at the product itself: how current it is, how much depends on one or two people's knowledge, and whether the code, the intellectual property and the customer contracts are clean enough to transfer. They look just as hard at the people. A strategic acquirer may be buying your engineers as much as your customers, and a financial buyer needs a management team it can back.
None of this shows up in EBITDA, and all of it shows up in diligence. Founders who have documented the product, tied key people in with sensible retention arrangements and cleaned up ownership of the intellectual property tend to get through that stage with their price intact.
5. Who is on the other side of the table
The same company is worth different amounts to different buyers. A strategic acquirer that can sell your product to its own customers will pay for that reach. A private equity group will pay for predictable cash flow and a team it can grow with. In technology the sale is more than a financial equation. Part of an advisor's job is to package the business and its growth story for the buyer that values what you have built, rather than sending the same financials to everyone.
The takeaway
EBITDA tells a buyer what the business earned. The price tells you what the buyer believes it will earn, how confident it is, and how much of the company depends on you. Recurring revenue, a growth story with evidence behind it, a team that runs without the founder and a product that transfers cleanly are what separate two companies with the same number. Most of them can be moved in 12 to 24 months, if you start before a buyer is in the room.
