When is the best time to sell your business?

Register here for our upcoming webinar 'The Essential Guide; How to sell your business' on the 11th and 21st October


It’s not uncommon to become attached to your business; it’s your creation, your baby; and you want, more than anything, to see it do well.  This is why when thoughts of selling occur, so many business owners miss their big chance; they have invested a large part of themselves into it and selling can feel like a personal failure.

My advice is simple: step back and look at the situation with some objectivity and take a reality check; your business needs to provide a healthy return for you and your shareholders. Once those profits start to show a downward trend, then the extrapolation of that trend will cost you massively. The sale of your business is potentially, the biggest, most significant sale of your life.  You need to get it right, first time - and timing is everything

Don’t make the mistake that most business owners make and ride your business up and over the top - As soon as the thought of selling crosses your mind, it’s time to put your ego aside, because it’ll sting a whole lot more if you miss out on your one big chance.  There have been examples in this sector of companies turning down good offers and later regretting it.  One that comes to mind is a business on the continent where the three shareholders turned down an offer of just over $100M; three years later they were fighting to save the business from bankruptcy. The business is still in operation and is probably valued now at 4% of the offer they refused.  Can you imagine how painful that would feel?

Finish on top
Be the Beatles - not the Stones.  Bow out gracefully, while profits are high and save yourself the embarrassment of trying to appeal to buyers when the market starts to decline.  Typically, business owners will only sell when they begin to see a drop in profits or revenues, or when the investment required to accelerate growth appears fraught with uncertainty and risk.  Unfortunately, they have probably already missed their chance.  This will be the biggest sale of your life and you only get one chance to get it right, so timing it accurately and having a clear exit strategy in place are crucial factors to achieving a successful exit.  The perfect time for you to sell is when your profits show a consistent increase; this allows buyers the flexibility to pay the optimum price for your business.

Avoid complacency
Don’t get comfortable just because your business is doing well; avoid trying to sell when your share of the market is about to shrink.   If you want to achieve the best possible price, you may have less time than you thought, so keep an eye on the market and, even if you’re not thinking of selling immediately, always have a good exit strategy in place.

Use your perception
When their sector is highly active and profitable, most business owners wouldn’t consider selling; however this could be the best time to sell. The increased attractiveness of the sector is likely to bring about increased investment, which could engender more and tougher competition in the market, leading to a potentially smaller market-share for your company.  It is important that you stay well-informed about the latest market trends and developments that may affect your sector, and consider carefully your ability to achieve sustained growth in a fast-changing market. It is essential to remain alert to the changing dynamics of your market and to be prepared to take action.

Have an exit plan – now!
As stated above, it is imperative that you have an exit plan before you consider selling.  Taking the above factors into consideration, remember that the sale of a business takes between 6 to 18 months – and sometimes a lot longer with protracted negotiations, due diligence etc..  If there is an earn-out as part of the deal, owner operators need to factor that in as well, calculating timings from the decision to sell right up to the sale itself.  Be prepared and time it right and you’ll get the best return possible.


Register here for our upcoming webinar 'The Essential Guide; How to sell your business' on the 11th and 21st October

01 October 2013Boss M&A Whispers