The Right Way To Think About Market Timing When Selling Your Business

When is the right time to put your company on the market? Many business owners struggle with this question. It's a difficult decision involving many complexities, but it doesn't have to be that complicated. There is one simple rule for any business owner to live by: ALWAYS have your company in the best position to be sale-ready. 

Any business owner should always be open to exploring strategic partnerships and in control of their company's long-term goals. Being adequately prepared to exit the business is also just sharp business acumen. Just because you are planning your exit strategy, it doesn't mean you are quitting. The most successful business owners often complete several deals that offer the highest value and make decisions in the best interest of the business and its long-term growth. You don't even have to look at it as "for sale" as much as it is open to new business opportunities differently. The bottom line is that successful companies are always market-ready and looking for what's next.

It's a bit of a myth when it comes to "good" and "bad" markets. Sometimes, it can be more challenging to secure the right kind of deal, but opportunities are always available. What the conditions are like in your sector also makes a difference in your options. Staying available and continuously looking can also help you be more in tune with what's happening in your market. Just because a bunch of speculators are saying that the market is "bad" right now doesn't necessarily mean it's true. This is how you can end up sidelined trying to guess the right timing and miss out on solid opportunities. 

Delaying the sale of your business until growth reaches a plateau may not always be the best answer. While it may seem logical to postpone a sale until your growth trajectory has plateaued with the goal of maximizing earnings today and sale proceeds tomorrow, consider the potential for growth and new opportunities. A business in the middle of its growth curve will secure a higher multiple of earnings than a larger business that is no longer growing. As a seller, you are generally better off selling sooner, leaving the big growth opportunities on the table for the buyer to capitalize upon. After all, if there is no more growth to be achieved, why would a buyer risk investing in something that has become stagnant? This perspective opens up a world of possibilities and potential for your business.

And, yes, economic shifts can impact the value of a business. But this is why being on the market early can significantly benefit. This is even more so if you are working with a highly experienced M&A team so that you can learn about your market relative to your business on a particular level. It means you can explore every option at every given stage. Plus, you will be much more educated and prepared to decide after you've had time to get acclimated to the market and learn to know what you don't know.

It's not uncommon for small and middle-market business owners to feel overwhelmed by the selling process due to resource constraints. However, enlisting the help of M&A experts can alleviate this stress and keep your company market-ready. This support system ensures that you are always looking for opportunities to take your business to the next level, without the burden of unneeded stress and ongoing expenses. Knowing that you have a team of experts by your side can provide a sense of security and confidence in the selling process. 

Because the sale process has many moving parts, starting early is always a brilliant plan. Make sure you have several years' worth of accurate financial records available for potential buyers. This way, you can act quickly when the right opportunity arises. Don't fall into the trap of waiting to sell because you think your company isn't perfectly prepared. Being prepared is essential to avoid staying caught up on a great deal. Remember that selling a business typically takes 6-12 months, so preparing in advance allows you to time your sale correctly and get the price you deserve. 

Several factors must be taken into account when deciding to sell your company. Ultimately, you want to get on the market early, take steps to maximize the value of your business, and set the stage for a smooth transition process so the company can flourish when it is in new hands. As an owner, you need to remain proactive and prepared for the market to get the best results and the most money out of a deal. 

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