Decoding the art of timing: should you sell your business?

Among the myriad of questions that entrepreneurs struggle with, the question of when to sell a business stands out as one of the most persistent and challenging. The realm of mergers and acquisitions is a delicate balance of art, science, and sheer effort. In this article, we explore the key considerations that can help business owners navigate the complex decision-making process of selling their companies.

Personal context:

• Age and energy levels: assessing your age and remaining energy is crucial. Are you ready for a new chapter in your life, or do you have the stamina for further growth and challenges?
• Value extraction: have you already extracted the value you wanted from your business, or do you see untapped potential?

Is your business ready to sell?

• Going Concern: While a solid, profitable business is attractive, there’s no need to overly “dress up” your business for an imminent sale.
• Target Audience: Recognize that different acquirers may find different aspects of your business appealing. It’s impossible to cater to every potential buyer’s preferences.

The 12-Month Myth:

• Constant delays: business owners frequently find themselves perpetually 12 months away from selling. Waiting for that next big contract or a system upgrade can become an endless cycle.
• Unpredictability: unexpected events, like economic shifts or industry changes, can occur within that 12-month window, potentially impacting your business’s value.

Economic and industry Landscape:

• Economic conditions: a robust economy is favorable, but resilient businesses can thrive even in challenging times.
• Industry dynamics: regardless of economic fluctuations, good businesses are sought after. Acquirers may be motivated by growth opportunities during tough times or excess cash during prosperous periods.

The illusion of perfect timing:

• Proven potential vs. past performance: selling the proven potential of your business often yields a higher value than emphasizing past achievements.
• Theoretical delays: endless strategizing and waiting for the “perfect” time can lead to missed opportunities. The market’s reality often unfolds only when you actively engage with it.

Overcoming the one real hurdle – you:

• Analysis paralysis: the biggest obstacle to selling your business is often your own hesitation. Waiting for 100% readiness may result in perpetual delays.
• Minimal risk: going to market doesn’t jeopardize your business. Even if the sale doesn’t materialize, you still have a thriving enterprise to run and nurture.

Entrepreneurs should recognize that waiting for the ideal moment may lead to missed opportunities. As the adage goes, “there is no perfect time”; the best time to sell, may be when you decide to take the leap. Contact The Finance Team if you require a part time financial executive that can assist you with getting your business ready for sale.