There are three main factors to consider and balance when determining the optimal time to sell your business. They are your personal goals; the growth and financial performance of the business; and the current economic conditions and prevailing multiples in your industry.
In an ideal world, and to obtain the best possible valuation, your personal interest in exiting or selling the business would come at a time when the business is growing quickly, and when strong economic conditions drive buyers to pay attractive valuations. This can definitely simplify your decision making, and if this happens to you, consider starting the sales process today!
But, like many other aspects of life, these three factors might not all conveniently align at the same time. Often an entrepreneur’s personal desire to exit the business is greatest when the company has hit a plateau in growth, when additional investment is required to spur more growth, or when competition and the economy has changed the dynamics and profitability of the business. Conversely, many entrepreneurs don’t want to sell when the business is growing, and the future looks bright.
Retirement timing, family obligations, health concerns, financial issues and burnout can all also drive the decision to sell, and any of these issues could occur at a time that is not optimal. Adding to the dilemma, the process to sell can take up a to a year and the buyer may also want you to stay on for some length of time.
We have helped many entrepreneurs work through these complicated issues. If you are evaluating timing, we can help you identify and prioritize goals and opportunities, and help provide you with information to develop a solution that strikes the right balance between your financial and personal goals. Email us or schedule a free call.
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