Every couple of years, McKinsey does one of these surveys where they ask big investors (the kind managing billion-dollar portfolios) what makes a company attractive. And every time, the answers reveal more about the state of business than just “what investors are looking for.” They tell us where business owners and executives should be aiming their attention.

What Investors Are Looking For: EBITDA

This year’s survey (August 2025) put financial performance right back at the top of the priority list. Specifically, EBITDA — earnings before interest, taxes, depreciation, and amortization. Thirty-one percent of the investors said it was their primary lens for deciding whether a business is worth their attention. If you’ve been in the trenches of a small or midsize business for any amount of time, you know that EBITDA isn’t some fancy Wall Street metric. It’s the clearest way of showing whether your operations actually make money once you back out the tax math and other things accountants add in. EBITA is how you can see what your business actually earns.

In a world that is buzzing non-stop about AI, the loudest message from investors is still, “show me the profit engine.” Not just the profit … but how you’ve engineered your company to continue earning that profit. And that’s a reminder small businesses can use. AI might get you in the conversation, but healthy cash flow is what keeps you in the game.

Competitive Advantage Still Matters, But ...

In this survey, competitive advantage came in second place. About 19 percent of investors said they look for businesses that have carved out and defended their market position. Interestingly, that number has dropped since McKinsey’s last survey. Which tells me that in an environment of inflation, volatile interest rates, and an uncertain economy, the big-money people are less impressed by differentiation for its own sake. They want evidence that your advantage translates into consistent financial performance, not just a clever story about why you’re different.

That doesn’t mean competitive advantage is dead—competitive advantage always matters. It means you have to prove your advantage works. It’s insufficient to say “our product is unique” or “our service is unmatched.” You have to show how that uniqueness translates into higher retention, repeat buying, or better margins. If your competitive advantage claims are just confetti and canned applause, investors, bankers, and your own customers will see it for what it is.

Don't Underestimate the Value of Leadership

The third most important factor in the surve is leadership. This is one area where small and midsize businesses often underestimate themselves. Investors don’t just look at whether the numbers are good; they look at whether the leadership team is aligned in what it says to investors, employees, and customers. When leaders send mixed signals about mission, culture, or strategy, it’s a big red flag.

I wish everyone understood that this is just as true outside the investor world. Customers pick up on misaligned leadership. So do employees. Even your supply chain partners can sense it. Alignment isn’t about everyone repeating the same slogans. It’s about clarity of intention, how well what you say lines up with what you do, and whether or not every decision points in the same direction.

Which brings us to something McKinsey highlighted that I think is useful far beyond the investor space: the equity story. Investors want a narrative that ties together your financial performance, your competitive position, and your long-term vision. They want consistency across every touchpoint, whether it’s a quarterly report, a pitch deck, or a just conversation over coffee.

Should SMBs Care What Investors Are Looking For?

Of course, most SMBs aren’t pitching billion-dollar investors. So why does this matter? Well, your equity story is still incredibly important. It’s just that your audience might be a bank, a prospective customer, or the people you’re trying to recruit. Your equity story isn’t just about ambition; it’s about showing who you are, what you do that makes you different, why you matter, how you’re planning to grow, and how your numbers and strategy fit together.

What About AI?

In case you’re wondering, AI showed up in the survey results too. Thirty-one percent of investors said AI or technology utilization was part of what they’re looking for. But that’s an important sentence. “AI or technology utilization.” That’s a huge jump from just two years ago, when it wasn’t even on the list. But it’s also not the hype-y demand for AI at all costs. Still, it’s important. If a third of investors now expect AI as part of the baseline, then “we use AI” isn’t a differentiator anymore — it’s table stakes. But the real question is if you’ve implemented AI in ways that actually change your economics or your customer value.

So if I were to boil this survey down into guidance for small and midsize business leaders, it’s this:

• Get your financial house in order and know how to talk about it in plain terms.
• Show that your competitive advantage creates tangible outcomes, and that it’s not just a good slogan.
• Keep your leadership team aligned and clear, because consistency builds trust way faster than charisma.
• Build your equity story like your future depends on it, because it does.
• And if you’re touting AI, be ready to explain how it changes the game for you. If it’s just a box that you’ve checked, that’s going to be obvious.

The investors may have been talking about billion-dollar portfolios, but these lessons cut straight to the heart of what keeps a business attractive at any size. And that’s in every business’s interest.