What Business Expenses Should You Cut or Keep Before Selling?
Before a sale, many founders try to optimize their financials by trimming costs or making strategic upgrades. But not every change lands well with buyers. In this short video, Kirk Michie explains how to think about expense timing, whether you’re investing in growth or managing EBITDA. He breaks down what’s smart to spend, what’s better left alone, and why buyers may not give you credit for certain moves. If you’re prepping for a sale in the next 6–18 months, this is essential advice.
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When preparing to sell your business, expense decisions can significantly impact your valuation and negotiating leverage. One of the most common mistakes founders make is adjusting spending in a way that appears short-sighted or artificial to buyers. Buyers are savvy — they’re looking for sustainable, scalable operations, not one-time spikes or drops in cost structures.
There are two key considerations:
1. Which Expenses Should You Invest In Before Selling?
If you’re contemplating upgrades — like moving to a new ERP system, hiring more salespeople, switching CRMs, or professionalizing budgeting and forecasting — you should only proceed if these investments would make sense regardless of the sale. Otherwise, they may reduce EBITDA and lead to a lower multiple without convincing buyers of added long-term value. Many of these growth ideas can be communicated in your growth narrative, rather than being forced into your current financials.
2. Which Expenses Should You Cut or Delay?
On the flip side, big capital expenditures and one-time expenses made shortly before going to market can negatively affect your EBITDA and create unwanted complexity in deal negotiations. While some non-recurring costs may be eligible for add-backs in adjusted EBITDA, buyers often push back hard on these, especially if they aren’t clearly documented or justified. Similarly, running personal expenses through the business (e.g. cars, travel) should be disclosed, but cleaned up in the final year for cleaner optics.
Key Takeaways:
Run the business as if you’re going to keep it. Avoid manipulative optics.
Delay large non-essential CapEx if it won’t generate immediate ROI before closing.
Focus on clean financials with clearly documented one-time adjustments.
Use your growth plan and pitch materials to communicate scale potential — don’t force it into your P&L.
Talk to your advisors early to plan expense strategy 12–18 months ahead of a sale.
This topic is crucial for maximizing deal value, reducing due diligence friction, and managing buyer perception. Get it wrong, and you may end up defending choices you didn’t need to make. Get it right, and you’ll present a healthy, efficient business with credible growth potential.
