Too often, business owners envision selling their business when they are ready to retire, travel, be with family, or pursue other interests. However, the best time to sell your business might not align with when you feel ready. You need to sell your business when it’s ready to be sold (not necessarily when you are personally ready.)
Every business undergoes a life cycle: start-up, growth, maturity, and decline. This cycle likely won’t sync with your personal life events like retirement. Many business owners focus solely on their personal circumstances, missing the optimal selling point—just before maturity sets in when growth is still peaking. Hitting the right time increases both the potential buyer pool and the likely sale price.
The Risks of Waiting
Your business will have many, many ups and downs over its lifespan, but waiting until you personally feel ready or experience a life event that forces you to sell now can lead to selling at the wrong time (in terms of maximizing value). Put yourself in a buyer’s shoes for a minute – when would you want to take over a company? Certainly not when it’s trending downward. Business buyers usually seek thriving businesses, not fixer-uppers. They are investing in the business’s potential cash flow and future growth, using its past achievements as a launching point. Selling when your industry is booming, and your business is performing well is what attracts a buyer and maximizes your financial return.
Now, before you start thinking that your business isn’t sellable, that’s not true. It CAN be done, but the seller who waits too long may not get what they want at the negotiating table.
Strategic Selling
Sometimes, waiting to sell can also be beneficial. We’ve worked with many sellers who, when they first came to us, were personally ready to sell. We were able to assess the business and show them improvements that would enhance the business’s value, and that by waiting a year or two they could significantly increase the sale price.
Be Proactive, Not Reactive
Here are steps to ensure you’re ready to sell at the optimal time:
Planning Your Exit
If you’re contemplating whether to sell now or continue to grow, contact us for a confidential discussion about your options. By understanding the critical timing of selling your business and preparing accordingly, you can ensure that you not only maximize your financial returns but also leave your business legacy in strong hands. Whether you own a small business or a large corporation, the right planning can make all the difference.
