Within five minutes, they've already formed a view on whether your business is worth their time. And that view is based almost entirely on three specific figures.

If those three numbers stack up, you'll get a phone call. If they don't, you'll get silence.

Most sellers spend enormous energy on the wrong things — writing up their history, polishing their listing, talking about potential. Meanwhile, the three numbers that determine whether a buyer engages in the first place are either working in their favour or quietly killing every conversation before it starts.

Here's what those numbers are, why they matter, and what to do if yours aren't where they need to be.

Why Buyers Make Decisions Faster Than You Think

Before we get into the numbers themselves, it's worth understanding how buyers actually work — because most sellers dramatically underestimate how quickly the filtering happens.

A serious buyer in the Australian market is typically looking at multiple businesses at the same time. They're comparing your listing to five others in your industry, in your state, at a similar price point. They've often done this before — either as a previous business owner, an investor, or someone who's been actively searching for months. They know what they're looking at.

The financial information you provide at the start of the process isn't a conversation starter. It's a filter. Buyers use it to decide whether you're worth their time before committing a single hour of due diligence.

Research consistently shows that buyers start with the numbers, and if those numbers don't clear an initial threshold, they don't look further. It doesn't matter how good your story is. It doesn't matter how loyal your customers are or how long you've been trading. If the three core numbers don't make sense at first glance, the conversation is over before it begins.

1: Net Profit — and Why Revenue Is Almost Irrelevant

This is the one that surprises sellers most, because sellers tend to lead with revenue. They talk about turnover. They say things like "we're doing two million a year" with obvious pride — and they should be proud, because building a business to that level is genuinely hard work.

But buyers don't buy revenue. They buy profit.

Buyers are making a financial decision. They're asking one fundamental question: if I hand over my money and take over this business, how much will I actually earn from it? Revenue tells them nothing about that. A business turning over two million dollars a year with expenses of one point nine million is a much worse investment than a business turning over seven hundred thousand with expenses of four hundred thousand.

The number they're looking for is net profit — the actual money left after every single expense has been paid. Rent. Wages. Stock. Insurance. Utilities. Commissions. Subscriptions. All of it. What's left at the end, after everything?

That's the number a buyer multiplies to arrive at a price. Which is exactly why it's the first thing they look for — and the first thing they'll try to verify when due diligence begins.

Here's where sellers often get into trouble. Many Australian business owners — for entirely legitimate tax reasons — run personal expenses through the business. The accountant has structured things in a way that reduces taxable income, which is perfectly legal and very common. But it means the tax return shows a profit figure that doesn't accurately reflect what the business actually generates.

When sellers claim the "real" profit is higher once you add back personal expenses, they'd better be able to document every single one of those add-backs clearly and convincingly. Buyers will scrutinise this heavily. A buyer's accountant doing due diligence is not applying the same standard as your accountant doing your tax return. They're looking for certainty, not creativity. And doubt — even reasonable doubt — gets priced in. Every dollar of profit that can't be clearly verified is a dollar that evaporates from your sale price.

If you want to maximise your sale price, the best thing you can do is run your financials cleanly for at least three years before you go to market. Not just for the final year — three years. Buyers want to see consistency. One good year looks lucky. Three good years looks like a business.

2: EBITDA — The Real Measure of Business Health

Once a buyer has seen your net profit and decided it clears their threshold, the next number they look at is EBITDA — Earnings Before Interest, Tax, Depreciation and Amortisation.

EBITDA is the standard measure used by most Australian business brokers and mid-market buyers to assess the true operating profitability of a business. It strips out financing decisions (interest), accounting conventions (depreciation and amortisation) and tax — all things that vary between buyers and ownership structures — to reveal what the business actually earns at its core.

Think of it this way. Your net profit might be lower than your actual business performance because you have a large equipment loan with significant interest payments, or because you're depreciating major assets. EBITDA adds those back to give a cleaner picture of operational earnings.

From that base EBITDA figure, adjustments are made for what's known as "normalisation." This is where a buyer or their adviser will add back owner's wages that are above market rate, personal expenses run through the business, one-off costs that won't recur (like a legal dispute or a flood repair), and any other items that distort the true recurring earnings of the business.

The goal of normalised EBITDA is to arrive at the most honest possible answer to this question: what would this business earn for a new owner, under normal operating conditions, without the current owner's specific circumstances affecting the numbers?

A business reporting $800,000 in net profit might be valued on $620,000 of adjusted EBITDA once the normalisation work is done. At a four times multiple, that's $720,000 less in a seller's pocket compared to what they might have expected. This isn't manipulation — it's the buyer applying a rigorous standard to something they're about to spend a significant amount of money on. Understanding it in advance puts you in a far better position to prepare.

The practical takeaway for sellers is this: know your normalised EBITDA before any buyer does. Work with your accountant or broker to calculate it honestly, understand what the adjustments are, and be ready to explain and document every one of them. Sellers who do this work upfront move through due diligence faster, with fewer surprises, and at better prices.

3: The Multiple — How Your Industry Affects Your Price

Once a buyer knows the normalised EBITDA, they apply what's called a multiple to arrive at a valuation. This is the third number — and it's the one sellers understand least.

The multiple is essentially a measure of how much a buyer is willing to pay for each dollar of annual profit your business generates. A two times multiple on a business generating $300,000 in EBITDA gives you a valuation of $600,000. A four times multiple on the same earnings gives you $1,200,000. Same business. Same profit. Very different prices.

So what determines the multiple? Primarily two things: the industry you're in, and the risk profile of your specific business.

Different industries command very different multiples in the Australian market. A café or takeaway food business in a competitive location with thin margins and high owner dependency will typically attract multiples in the range of 1.5 to 2.5 times EBITDA. A professional services firm with recurring revenue, strong systems and low owner dependency might attract multiples of three to five times or more. Technology businesses with subscription revenue have sold for significantly higher. The industry establishes a baseline — the specific risk profile of your business determines where within that range you land.

Within any given industry, buyers push the multiple up when they see things they like: clean financials, diverse customer base, strong systems, a management team that doesn't need the owner present, a good lease with term remaining, and consistent performance over multiple years. They push it down — sometimes dramatically — when they see things they don't like: owner dependency, customer concentration, messy records, a lease running short, or performance that varies wildly year to year.

This is why two businesses in the same industry, with similar revenue, can sell at completely different prices. The multiple is doing the heavy lifting — and the multiple is entirely driven by how confident the buyer feels about the future earnings of the business without you in it.

The size of your business also matters. Australian businesses with revenue under two million dollars typically sell for two to four times EBITDA. Businesses between two and ten million tend to attract three to six times. Above ten million, multiples of five to eight times are common. Larger businesses attract more sophisticated buyers, are perceived as less risky, and benefit from more competition in the buyer pool — all of which pushes the multiple higher.

What to Do If Your Numbers Aren't Where They Need to Be

The honest answer to this question is: start fixing them now, not when you're ready to sell.

The businesses that achieve the best sale prices in Australia are the ones where the owner treated the exit as a project — something they worked on over two to three years, not six months. In that time, they cleaned up their financials, reduced owner dependency, built their EBITDA through careful cost management and revenue growth, and created a business that didn't need them to function.

If your net profit is lower than it should be, look at your cost structure. Are there expenses that could be reduced without damaging the business? Are there revenue opportunities you haven't fully pursued?

If your EBITDA is being distorted by personal expenses, start separating them. Not just for the eventual sale — for your own clarity about what the business actually earns.

If your multiple is likely to be at the lower end because of owner dependency or customer concentration, those are structural problems that take time to address. Start delegating. Start documenting. Start diversifying your customer relationships so that no single client represents an uncomfortable percentage of your income.

None of this is quick. But none of it is impossible. And the return on investing this time is measured in hundreds of thousands of dollars — sometimes more — when you eventually go to market.

The three numbers a buyer looks at first — net profit, EBITDA, and the multiple — aren't arbitrary. They're a buyer's way of answering the only question they actually care about: will this business make me money after I buy it, and how confident can I be that it will?

The more clearly and convincingly your numbers answer that question, the faster a serious buyer will pick up the phone.

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