When is the Best Time To Sell Your Company

sell-2At B2B CFO®, our business owner’ clients often ask us, “When is the best time to sell their company?”

This is a very delicate question because selling a business is a major life decision. According to Woodbridge International (M&A Advisors to the Middle Market); owners need to come to the decision to sell after a long period of reflection so that they are mentally and emotionally prepared to transfer their company to new owners and move on to other pursuits.

Woodbridge advises that business owners should first consider their ‘psychological readiness’ to let go of their business and create a post-transaction vision for their life.

Sidebar:  I’d like to amplify Woodbridge’s point on psychological readiness with a real world example.  A good friend owned a very successful small business that was otherwise well positioned for sale — save psychological preparedness.  That owner was bowled over by the very first offer to buy the company — it can easily happen — selling your company is a very emotional transaction.  First date to close was under 2 months.  Long story short that nearly completely, emotion driven decision, literally cost that owner 2X the purchase price!  But that’s a story for another day.  The lesson to be learned is the critical importance of assembling a trusted team of outside advisors – you and your team are very likely “too emotionally close” to the situation that will very likely be the largest financial transaction of your life – to reach a carefully considered, emotion free, prudent decision without the benefit of capable, trusted, emotionally detached, outside counsel.

The second consideration in knowing when to sell is to determine whether the business is on an upswing and has ‘Legs’.   This is different from trying to ‘Time’ the sale perfectly out of greed and wanting to sell at the ‘Peak’.  The best time to sell a company is when it is operating efficiently and profitably so its performance is sustainable into the future.

Once these two questions are answered, the business owner will know that they’re ready to close out this chapter in their lives and move-on to hopefully new and interesting challenges.

If you were my client, this is the counsel I’d give you about what you should start thinking about to determine the best time to sell your company.

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