When Is The Right Time To Sell Your Business?

When it comes to selling a company, quite a few factors need to be considered to extract the most value from a sale. 

First, there are factors outside the company that you cannot control that will affect the level of demand and how much buyers are willing to spend. These external market factors include economic conditions, interest rates, industry trends, and the legislative and tax environment. These dynamics can shift at any time, so it is essential to have your business always primed and ready for a sale when it comes time to pull the trigger.

What is often more important than the external factors impacting your company are the internal factors that you CAN control. This is about achieving your maximum company valuation, which means having your company in tip-top shape. Some areas to focus on are revenue, profitability, turnover, consistency, location, assets, brand value, customer base, and intellectual property. Also, buyers tend to see growing companies as the most attractive targets because of higher confidence levels regarding future earnings potential.

Both external and internal factors can always be in a state of change, which means it's not uncommon for a company's value to fluctuate. All businesses see points where growth naturally reduces and peaks. This is why timing your exit becomes so important regarding how much money you spend after closing a deal. And why having an M&A expert in your corner can ensure you get it right—and get every last penny you deserve.

Don't Put Off Exit Planning

You might think, "I'm not ready to sell just yet, so I don't need to have an exit plan right now." That may seem logical, but that philosophy is selling yourself short in the big-picture context. It would help if you were always considering your eventual exit. We see too many owners who delay exit planning because they cannot foresee selling currently. Such procrastination can leave you with significantly reduced transaction value. Or even worse, your company can become unsellable if it falls too far into decline for a buyer to risk it. An M&A advisor can help you form your exit plan so you are prepared for the right time to sell and also be prepared for unforeseen circumstances that could force your hand.

Even if you do not plan to sell right now, having a solid exit plan in place can be pivotal because it:

• Protects the company in case of a sudden, significant, life-changing event
• Maintains your focus on the long-term vision and more significant picture
• It pushes you to think about the parts of your business that need special attention
• Ensures that your succeeding management team is aligned with your vision for the company's future

Ideally, exit planning should be conducted about 10 years before you plan to actually exit or retire so that growth and value strategies can flourish.

The Current Market

The M&A market is constantly evolving; unfortunately, we need a crystal ball to peek into the future. However, the market is seeing more technology-driven deals than ever; cross-border M&A has been up, private equity firms still have a ton of capital that needs to be unloaded, and environmental, social, and governance (ESG) initiatives are boosting M&A deals. These trends are largely expected to continue throughout and beyond 2023.

You have worked hard to build your business and deserve to get every last dollar worth when you sell it. It's a significant decision and can be pretty emotional. Selling a company is a highly complex undertaking. This is why being prepared is so critical. You want to carefully make your decisions to ensure that you explore ALL your options. Partnering with a reputable M&A professional will give you many advantages in an arduous process, such as improving your business, marketing it effectively, maintaining confidentiality, and creating a competitive bidding environment. Plus, a quality M&A advisor has global connections you will not find on your own and negotiating experience that will raise the game.

If you are considering selling or realize that you should get your exit plan in place, our talented Benchmark International team is ready to discuss your goals and start planning your prosperous future.

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