When to sell a business – make sure the odds are in your favour!

Identifying the best time to sell a business causes a dilemma for most business owners.

Full HouseIn purely commercial terms, the ideal time is when the business can demonstrate consistently rising revenue and profit, and more importantly, can demonstrate an expectation of more to come.

That’s the commercial view. But the decision to sell a private business is not a purely commercial decision.

Whilst there is no set formula there are some indicators that will help you make the decision on whether the odds are favourable.
Personal Indicators

  1. There are changing personal circumstances that may in future make a sale essential
  2. It’s a great business but it’s taking too much of your time and energy
  3. You have a compelling reason to want to sell, e.g., retirement, plans for a new venture, etc.
  4. It’s a family business but the next generation aren’t interested in taking over
  5. You feel that you’re emotionally ready to step away from the business
  6. You’re feeling burnt out and passion has been replaced with exhaustion
  7. Deep down you feel the business needs a new leader to achieve its full potential

Commercial Indicators

  1. The business is doing well financially and is growing
  2. Your business is in a growth sector and has potential to capitalise on that
  3. You have a strong management team that runs the business without your daily involvement
  4. You have a business plan and financial forecasts that you’re confident you can meet
  5. The proceeds of a sale are likely to meet your future financial needs
  6. The business will need further financial investment if it is to grow
  7. A sale could solve some major business issues, e.g. new talent

If your answers are mostly “Yes” then it’s time to start putting some plans in place. Whilst doing so, bear in mind that it takes a considerable time to sell a business – typically 10 months – and that may affect your timescales.

Above all, you need to be sure that selling is what you really want; there are alternatives that you can explore. Selling a business can be a roller-coaster ride and it does require commitment, so don’t start this process unless you’re 100% committed to completing it.

If the answer are mainly “No” but you know that at some stage you will want to sell the business, then it would be wise to prepare a strategic “growth to exit” plan that will increase the value of your business, making it more attractive to potential acquirers and more likely to achieve a better price when the time comes to sell it.

You hold the cards and the stakes are high, so to get practical, impartial advice on when to play your hand, come along to one of our free Masterclasses. We’ve completed hundreds of deals and we can advise you when the odds are in your favour.

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