When is the right time to sell my business?
The timing needs to be right for you, your business, and the acquisition market.
Deciding when to sell your company can be a difficult process, because you need to think about the sale from a few different angles.
Of course, your personal motivations are perhaps the most crucial factor. Company sales are often driven by retirement, or a desire to use the sale proceeds to start a new business or pursue other plans and goals. Sometimes tax planning issues can create a sense of urgency around a sale, too.
Whatever your personal motivations might be, it is also important to think about whether the business is ready for sale now, or might benefit from a period of preparation before you try to find a buyer. This is partly connected with the valuation you hope to achieve. For example, you might decide that one more year of hard work in the business is worthwhile, if it is going to increase profits and push up your eventual sale proceeds. There may also be current issues in the business that could hinder or even prevent a sale from taking place. It could be beneficial to invest time in ironing out commercial or operational problems, in order to achieve a faster and more profitable sale.
On top of your personal objectives and the condition of the business, there will be numerous external factors that could affect the ideal timing for your sale. These could include the performance of the economy as a whole, challenges and cyclical changes specific to your own industry sector, and the demands and preferences of your potential buyers.
How long will the transaction take?
Ultimately, finding the ‘right’ time to sell your business is a question of finding the best possible alignment between the interests of you, your business, and the market.
The length of time needed to complete a sale from start to finish is hard to predict. The first part of the process, which involves preparing the business for sale, is the most variable. Depending on how the business is run and how it is performing, the preparation process can be anything from a few weeks to a few years.
Once the business is ready to enter a transaction process, it’s a good rule of thumb to expect to complete the sale within six to nine months. That said, depending on the nature and complexity of the business, some buyers can complete transactions to a much shorter timescale.
If you are thinking about selling your business, please do not hesitate to get in touch. We will be very happy to help you think through any questions you might have about finding the ideal time to sell.