Marketing strategist and business growth expert Jay Abraham explains on today’s episode of the Strategic Edge that many small and midsize business owners undervalue their company’s potential to exit. Entrepreneurs tend to concentrate excessively on immediate profits, missing the larger wealth-building opportunities available through selling the business.
Abraham highlighted that buyers are not merely paying for a company’s past results; they are betting on its future potential for consistent growth, profitability, diversification, and defensibility. Businesses that strategically focus on excelling in these areas can command sale prices well above industry averages.
According to Abraham, acquirers focus on future-oriented indicators rather than past results, assessing a company’s ability to sustain long-term growth and profitability. Many founders, he notes, concentrate on present metrics such as current revenue or profit, overlooking the levers that can enhance long-term enterprise value.
For most entrepreneurs, Abraham argues, exit planning represents the single most important opportunity to convert an illiquid business asset into liquid wealth. By aligning their companies with buyer expectations around future performance, owners can dramatically increase the price they ultimately receive.
4 drivers of above-industry acquisition multiples
Abraham identified four key factors that determine whether a business can achieve premiums above industry multiples, which include:
- Above-average qualitative growth percentage
Businesses growing substantially faster than sector peers signal robust demand and operational effectiveness, and quality of growth matters as much as quantity. - Above-industry profitability
Many owners underestimate their control over profits, which can be amplified through pricing strategies, structural efficiencies, and backend monetization approaches. - Less than industry concentration risk.
Businesses that are overly reliant on a single customer, platform, supplier, or employee are perceived as fragile. Diversifying revenue streams and customer bases mitigates these risks and enhances valuation. - Defendable advantage
Abraham explains that even without patents or exclusive rights, companies can achieve defensibility by maximizing lifetime customer value. Higher customer lifetime value allows for more aggressive acquisition, retention, and marketing strategies, giving the business a unique competitive edge.
He asserts that companies excelling in all four dimensions can justify selling at multiples well above the industry average.
“One of the easiest ways to gain profound and stealth-like advantage is to have a much higher industry lifetime value.”
Additionally, Abraham recommends that business owners proactively engineer value prior to a potential sale. He encourages building multiple revenue pillars to guard against market or operational disruptions and maximizing lifetime customer value through complementary partnerships and backend offerings.
Moreover, he believes that every business eventually changes hands, whether through a sale, succession, closure, or financial distress. Entrepreneurs who fail to systematize operations, reduce owner dependency, and diversify revenue streams often find their companies unsellable or subject to steep discounts. Proactive exit engineering, he says, is not merely a tactical option but a long-term wealth strategy that protects owners from unforeseen circumstances while unlocking maximum financial value at the time of a transfer.
Preeminence as a growth strategy
Abraham describes preeminence as the ability of a business to be perceived as the most trusted advisor within its niche, rather than simply a seller of products or services. This positioning fosters loyalty, repeat purchases, referrals, and premium pricing power. Businesses that prioritize improving clients’ lives and delivering meaningful outcomes create durable brand equity and increase lifetime value. Notably, high referral rates not only reduce customer acquisition costs but also enhance the company’s overall attractiveness to prospective buyers.
According to Abraham, businesses with seemingly similar strategies often achieve vastly different outcomes because they execute them at different levels of depth and precision. Variations in business models, distribution channels, trust-building systems, and backend monetization can compound over time, leading to significant performance disparities. Companies that more effectively leverage assets, communication, partnerships, and lifetime value optimization gain a lasting competitive advantage, enabling them to consistently outperform peers.
Ultimately, Abraham urges entrepreneurs to view their business as scalable wealth engines rather than static income sources. By systematically improving growth, profitability, diversification, and defensibility, founders can transform modest enterprises into high-multiple acquisition targets.
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