What is the impact of marketing on EBITDA, net profit and the sale value of your company?
A worked example over three years: what a marketing budget does to your EBITDA, your net profit and what your business is worth when you sell it.
And why smart owners invest in marketing structurally, and why it raises what their company is worth.
Suppose you run a healthy business making €500,000 in net profit a year. You are considering investing in marketing structurally. Not because you have a problem, but because you know there is more revenue and more profit to be had.
What is the ROI of marketing, in numbers?
You start with a marketing budget of €150,000, and you know from experience or from your data that you can achieve a 3x return at the revenue level. What does that mean for your profit? And more interestingly: what does it mean for the sale value of your company if you sell in three years?
How it plays out in practice
Year 1: you start with a €150,000 marketing budget
- extra revenue: €700,000
- gross profit at a 50% margin: €350,000
- marketing cost: €150,000
- extra EBITDA: €200,000
- extra net profit after 25% tax: €150,000
Your EBITDA rises from €500,000 to €700,000.
Year 2: you raise the budget by 20%
- marketing budget: €180,000
- extra revenue at 3x: €540,000
- gross profit: €270,000
- extra EBITDA: €90,000
- extra net profit after tax: €67,500
Cumulative after two years: €290,000 in extra EBITDA and €217,500 in extra net profit.
Year 3: you raise the budget by 20% again
- marketing budget: €216,000
- extra revenue at 3x: €648,000
- gross profit: €324,000
- extra EBITDA: €108,000
- extra net profit after tax: €81,000
Cumulative after three years: €398,000 in extra EBITDA and €298,500 in extra net profit.
Selling your company after three years
Say that after those three years you sell the business at a 3x EBITDA multiple:
- without marketing: EBITDA of €500,000, sale value €1,500,000
- with marketing: EBITDA of €898,000, sale value €2,694,000
Your gain at sale: €1,194,000 extra.
And the best part? In Belgium that capital gain is tax free on a share sale of a private limited company, as long as it qualifies as normal management of private assets. So the €1,194,000 in extra value you created through marketing goes into your pocket net.
Combine that with the net profit of the preceding years and you have €298,500 in cash flow along the way, a €1,194,000 tax-free exit, and €1,492,500 in net profit over three years, purely from strategic marketing.
The final tally
- total marketing budget: €546,000
- extra net profit: €298,500
- extra value at sale: €1,194,000
- total return: €1,492,500
Every euro you put into marketing brought back €2.73.
Conclusion: marketing is value creation, now and later
You do not only raise your revenue. You strengthen your profit, your company becomes more attractive to buyers, and you improve your own exit. Marketing is not a cost when you use it well. It is a lever for growing net worth.
Make your next smart move. Get in touch.
The figures above are a worked example, not a forecast. Your margin, your multiple and your tax position decide what the same budget does for you.
In short
How does a marketing budget affect EBITDA?
A marketing budget raises EBITDA when it returns more than it costs. In a worked example, a €150,000 budget with a 3x return at revenue level brings €700,000 in extra revenue, €350,000 in gross profit at a 50% margin and €200,000 in extra EBITDA in the first year, lifting EBITDA from €500,000 to €700,000.
How does marketing increase the sale value of a company?
Marketing increases the sale value of a company by raising the EBITDA that buyers apply a multiple to. In a worked example, a business sold at a 3x EBITDA multiple after three years is worth €1,500,000 without marketing, at €500,000 EBITDA, and €2,694,000 with marketing, at €898,000 EBITDA: €1,194,000 extra at sale.
Is the capital gain on selling a company taxed in Belgium?
In Belgium, the capital gain on a share sale of a private limited company is tax free as long as it qualifies as normal management of private assets. In the worked example, the €1,194,000 in extra value created through marketing therefore goes to the owner net. The figures are an example, not a forecast: margin, multiple and tax position decide the real outcome.
Team Stigo, Stigo Digital Agency
Writes about what actually happens inside the campaigns we run from our own location in Antwerp. Questions about your own numbers? Book a call.
