If you’re agonizing over the decision to sell your business, you’re not alone. Almost all business owners face this dilemma at some point in time. You may find yourself wondering who to talk to, where to get good advice, how to find buyers, and what price to anticipate.
Selling a business is a complex subject and something I’ve devoted my professional life to helping business owners achieve. So, before we get too far ahead of ourselves, let’s start with the most common question I receive, “When is the Right Time to Sell My Business?”
Answer: Sell your business when it is ready to be sold, not when you’re ready to sell it.
What does that mean? Most business owners sell their companies for personal reasons such as: fatigue, illness, financial strain, lack of a successor, or a change in family situation. While these businesses still may be sold, the time to completion is greater and the price realized is less than the owner desires.
Nobody wants to suffer through a long, drawn out sales process. Especially if you’re already suffering from fatigue or another personal circumstance. To avoid this, always have the business ready to be sold. Start now. The more prepared you are, the more buyers you will attract and the higher price you will command. (Besides the fact that the business will be easier to run, allow for more time away, and attract better financing while you still own it!)
Think of it this way, when you bought your house, were you looking for a fixer-upper or something move-in ready? While there are business buyers seeking fixer-upper projects, most are looking for strong, stable businesses that can support their lifestyle and acquisition cost. If your business requires major upgrades or is currently under construction, your buyer pool will be limited, the same as selling a home. A decrease in available buyers results in a longer sales process. A move-in ready home not only attracts more buyers and commands a higher price, it is more fun to live in!
So, how will you know when the business is ready to be sold? Talk to an investment banking professional or a business appraiser (may also be called a business valuator). Both are trained to analyze your business from the perspective of a potential buyer and assess the most probable selling price in an arms-length transaction. In doing so, they may uncover deficiencies in the business that will need improved prior to sale. Once improved, your business can be sold at any point when you are personally ready to do so. If no deficiencies are identified, congratulations, your business is ready now and you control your business future!