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After working hard to build your business for years or even decades, it can be challenging to determine when to sell your business and move on to future pursuits (whether that means retirement or a brand-new endeavor). Timing is everything in the business world. You may want to optimize your potential profit by selling at the peak of growth rather than selling too soon or waiting too long. These five signs indicate that you may want to consider planning your next steps and possibly finding a buyer for your company.
Even if growth was your ultimate business goal, it’s possible for your business to become outsized in relation to your dreams and ambitions. Are you feeling fatigued rather than energized by new opportunities and the challenges they bring? Do you dream about starting a different type of business, spending your time traveling, or simply enjoying life without being tied to your company’s needs? ? If these feelings sound familiar, think about whether you may want to step aside as your company heads for the stratosphere.
If you get an offer you can’t refuse, it could be your best chance to take advantage of business equity. You might want to consider selling if you have three to five years of solid growth with a sustainable business model for future expansion. Even if you weren’t already thinking about selling, carefully consider any attractive offer that falls into your lap. In this instance, the question of when to sell your company might be answered for you if you get an offer you can’t refuse.
It could be the right time to plan your exit strategy if the trends in your industry aren’t aligned with your business model. On the other hand, trends that turn in your favor boost the value of your business, possibly attracting lucrative interest from investors who want in on the action. At least once a year, review the trajectory of trends in your industry. If you see new innovations on the horizon that could enhance the company’s profitability, revisit whether it’s time to optimize your sale value and enjoy your next chapter…
Some business owners wait until the landscape has already transformed, which can reduce the potential profit of a business sale.
If your personal net worth primarily consists of the business and its assets, you may reach a stage of life when you need more liquidity. For example, the value of your company may represent the bulk of your retirement savings, and you are approaching an age where you want a slower pace.
If this scenario sounds familiar, you can optimize your profit by waiting for a seller’s market with many entrepreneurs competing for a limited selection of business opportunities. You will need a professional valuation of the company to determine its fair market value. You may also want to explore selling the firm to a competitor in your industry or an adjacent one.
Have you been rethinking the big picture? Sometimes, major personal transitions can have you wondering, “Should I sell my company?” You might find your passion lies elsewhere after the birth of your first grandchild, a significant health challenge, or the chance to pursue a new opportunity. Maybe you got inspired by a new idea and want to see it through, so you’re spending a lot more time on your pet project and less time on your core company. Divorce, the death of a loved one, and conflict with a partner are other common reasons for entrepreneurs to sell their businesses.
Once you decide when to sell your business, you can optimize the purchase price by preparing to put it on the market. Most experts recommend taking enough time for the thorough due diligence involved in finding a qualified buyer. During this phase, focus on making the company look as attractive as possible to potential entrepreneurs.