This compounds. And it costs almost nothing.

TL;DR: Most founders assume a higher multiple requires more revenue or a bigger market position. But the buyers who assign premium multiples are often looking at something simpler: how much of the business's existing value is being captured versus lost. Leakage, the value that drains out through pricing drift, discount creep, and unmanaged contracts, is one of the clearest signals of how a business is run. Eliminating it before a buyer arrives is one of the highest-leverage moves a founder can make, because it simultaneously improves current cash flow, raises the effective EBITDA, and signals operational maturity.

Most founders think of their exit multiple as a function of industry, size, and growth rate. And those factors matter. But there's a dimension that's less discussed and often more influential: operational discipline.

A buyer assigning a multiple is making a bet on the durability and quality of your earnings. Not just how much you earn, but how much of that earning is structural versus circumstantial. A business with tight pricing governance, benchmarked vendor relationships, and a clean cost structure is telling the buyer: these margins are real, they're sustainable, and they'll hold after you leave.

A business with significant leakage is telling a different story. It's saying: there's money here, but it's loosely held. The margins work today, but they depend on a set of unmanaged assumptions that could shift at any time.

That distinction doesn't just affect the number. It affects the risk premium the buyer applies. Leaky businesses get lower multiples not because they earn less, but because the buyer has to assume some of those earnings are recoverable rather than reliable. They discount the price and plan to capture the leakage themselves.

I want to be clear about what makes leakage elimination so powerful as a pre-exit strategy. It's not just that it improves your EBITDA, though it does. It's that it does three things simultaneously.

First, it puts more cash in your pocket right now. Every point of recovered margin flows directly to the bottom line with no additional revenue required.

Second, it raises the EBITDA that your multiple gets applied to. If you're selling at a 5x multiple, a single point of recovered margin on a $5M revenue business isn't just $50K per year. It's $250K on the exit price.

Third, and this is the one most founders miss, it changes the multiple itself. A business that demonstrates tight operational governance commands a higher multiple than one that doesn't, all else being equal. So the leakage you eliminate gets multiplied at a higher rate than the leakage you leave behind would have been.

This is compounding in the truest sense. And it requires almost no capital to execute.

This is one of the areas where the work we do inside Scalable has the most immediate, measurable impact. Helping founders identify where value is leaking, build the governance to stop it, and present a business to buyers that signals operational maturity at every level. It's not the most glamorous work. But it's often the work that moves the number more than anything else a founder can do in a 12-month window.

The founders who do this before a buyer arrives capture the full value of the tightening. The founders who wait discover that the buyer already priced the leakage into their offer, and the recovery becomes someone else's upside.

The goal isn't to become obsessive about costs. It's to build a business where the economics are intentional, visible, and defensible to anyone who looks at them. A business where the margin story holds up under scrutiny, not because you explained it well, but because the structure supports it.

That's the difference between a business that earns well and a business that's built to be worth something. Leakage is one of the quietest ways the gap between those two things grows. And closing that gap is one of the quietest ways to make yourself optional.

— Roland

AI isn’t just changing businesses. It’s changing negotiations.

In some industries, automation isn’t a future problem, it’s already shaping how deals get priced today.

The same force that threatens margins can also create leverage at the table… if you know how to think about it.

Most buyers see AI as either a risk or an opportunity.

The real advantage is understanding it as both, at the same time.

Want to see how AI becomes leverage in negotiations? Watch the video below.