The best time to sell your business

A common question exit planning professionals get is, “when is the right time to sell?” While the answer that Certified Exit Planning Advisors (CEPA®) give is relatively simple, let’s first examine the considerations and factors that shape exit outcomes.

The first factor is your personal timeline. This timeline relates to your age in part but also relates to your health, personal readiness and sensibilities.  According to the Exit Planning Institute’s CEO, Chris Snider, in his book “Walking to Destiny,” enthusiasm and energy begin to decline around the age of 62. The second factor is the business’s lifecycle. All businesses have a lifecycle that is generally marked by accelerated growth early on, leading to a plateau and eventual decline if the business is not expanded in some way. The third factor is the private capital markets, which fluctuate over time based on economic conditions.

Conventional wisdom may lead you to a strategy that aligns all three variables with perfect timing. In an ideal scenario, you would sell your business when it is at its peak, the capital markets are strong, and when you are at a place of being ready to slow down. However, aligning all three of these variables is a difficult, if not impossible feat. When does that kind of timing actually work? If you haven’t prepared for it, it doesn’t. Besides that, it’s risky timing the market, because it doesn’t account for the unexpected that could happen. If current circumstances aren’t proof of the unforeseen and unpredicted, then I don’t know what is. Other unpredictable events may occur within your business or for you personally.

While there are certainly private capital market highs and lows, focusing on market timing won’t help you if you and your business are not ready or attractive to a buyer. So, “When is it a good time to sell?” 

Let’s take timing out of the equation. Let’s make it irrelevant by being ready at any time. By focusing on value enhancement initiatives and aligning your personal, financial, and business goals, you will be ready to exit at any time. Being ready at any time allows you to access unsolicited offers, meet market conditions (though a good business will sell regardless of market conditions), and make the choice to either grow or sell on an ongoing basis.