The owner of a successful company is considering selling their business, thinking now would be a good time to sell. However, they are told by an outside adviser that since business is good, they should hold on to the business for a few more years and get a higher price for it. On the surface, this is sound advice, but there is another side to every piece of advice.
Although no one can truly predict what the economy will do, there are a few possible scenarios that could lead to a business downhill rather than uphill. The industry itself could be affected by a new technology or new companies that are entering the field. It is also possible that the current owner, already considering selling, is checked out and cannot or will not maintain the zeal necessary to keep the business competitive. After all, after owning a business for several years, the owner could just be tired and ready to move on.
There are other areas to consider as well. For example, equipment may need upgrading or replacement, products or services may be aging and need revitalizing. Your lease may be expiring and there are long obligations required to renew them. What could look like a good strategy to increase your selling price in the future, has now backfired. The costs of continuing to operate the business have increased dramatically and the owner is losing interest.
The right time to sell your business may be when your industry, product line or service is at or near the height of its success. There is a moment where the business or industry is peaking and that is when everyone wants “in” – and that is a time to sell. As they say, timing is everything.
The right time might be when the company is at the top of its game. Sales are robust and growing, the balance sheet is squeaky clean, and the employees are productive and happy. Another good time to sell is when there is a solid buyer who is seriously interested in purchasing the company, or perhaps, when a manager within the company is ready to take over in a buy-out of some form.
So when is the right time to sell? Perhaps when the owner first decided it might be time. There really is no “best time” to sell. The future is full of unknowns and surprises. No one but the owner knows when it is the right time to sell, and when it’s time – it’s time!