When Is The Right Time To Sell Your Business?

Details

Category: Heading for the Exit

When Is The Right Time To Sell Your Business?
Is Yours A Retirement Sale?

For many people the business they own is a result of many years hard work where they have developed and nurtured their company in all the ways they deemed fit at the time with probably the intention at the back of their mind that one day they would sell it and reap their rewards.

Yet many business owners don’t really consider the sale and their exit until too late in the day!After spending sometimes their whole life dedicated to their company they then throw away what is potentially the most lucrative time for achieving the best return. It’s like throwing away or declining the terminal bonus on your pension pot. Would you want to do that?

Selling your business at the right time to the right buyer can add significant value in those very final stages of your ownership. The fact it can increase your wealth considerably is justification enough to give the exit process the time and planning required.

The business you develop over the years will be acquiring a value all the time and achieving a level of profit which may be used in determining a sales value. The important thing is to place a value on it based on what the future potential of it is and it will offer different potential to different buyers depending on synergies with other businesses they own, experiences and resources they have. The stronger that potential can be the more optimal point you sell your business at and ultimately receive a higher price. If the business has already passed its optimum and is now just sluggishly moving then it gives the purchaser lots of opportunity to negotiate the price down.

Whilst they will want to negotiate a price down anyway the more items you have in your favour and strengths of your business such as future potential contracts, supplier deals, key employees, interest from other bidders, anything like that makes it a stronger proposition and will achieve a higher price.

It is important to sell your business whilst you still have a passion for it and drive, not when you are tired, want to retire, and have lost the momentum. Owners who don’t plan properly risk having sellers remorse and a wish that maybe they had done things differently.

It could be your business will take some time to sell and that’s all the more reason to sell whilst it’s on the ‘up’ because if it’s already on the ‘down’ it’s going to make it a weaker and weaker proposition and achieve a lower price than you would hope for.

There are crucial elements that need to be planned with your advisors, particularly taxation issues and where there is more than one shareholder, shareholder issues. Different shareholders may well have conflicting ideas and needs as to exiting the business. To maximise your return and to understand when the right time is to sell it’s important to take some time out of your business and plan plan plan.