Is there a best time to sell one’s business? Most of the times, we are contacted by business owners wishing to sell their company in the near future, within three to twelve months. Often, their decision is motivated by personal reasons, such as the need for a change, the desire for new challenges, retirement, to name a few.
Unless circumstances do not allow them to do so, we advise our clients to think strategically when deciding the said time.
Some recommendations in this regard include the following:
- Growing companies are more attractive. If your company is experiencing a positive trend in its revenues or profits, don’t wait until the tide changes to go to the market. Any temporary gain you may benefit from owing to the increasing sales, could be completely wiped out because of a loss in the company’s value in case the trend shifts negatively.
- Align the sale with the renewal of key contracts. Often times, companies have important contracts, whether with clients, suppliers, landlords and others that have an expiration term. Buyers give more value to these contracts if enough time is left to materially benefit from them.
- Sell while you are in good health. Nothing is more detrimental to the value of a business than being forced into a quick sale.
- Don’t postpone the sale indefinitely. Small to medium companies get “old” with the seller, especially if he/she is key to their operation. Moreover, leave time to enjoy your retirement in good health
- Take the time to prepare your company. Building a strong management team, creating processes, diversifying your client base, tax planning, and so on are all factors that can add significant value to your business. Plan ahead of time. Don’t wait until the last minute.
- Don’t wait until you lose your motivation. If you are tired or bored, it will reflect on your company’s performance. Being eager to leave will also affect your objectivity when negotiating a sale.
Contact Mergex to discuss and determine the optimal time for sale in your particular case.
