When to Sell Your Business - Short Answer & Detailed Analysis

Is now the right time to sell your business, or should you wait for a better opportunity?

While there is no clear-cut answer to when to sell your business, several pointers can help you determine the perfect time to maximize your profit.

Your willingness
Company’s current status
Market conditions

And many more.

Timing is everything when it comes to selling a company, and making the move at the right moment can significantly impact your financial return and long-term success.

In this guide, we discuss expert strategies and tips on when and how to sell your business effectively. We'll also explore how much you should sell your business for to optimize your take-home amount.

Let's get to it!

Short Answer - When to Sell Your Business

As mentioned, there's no rule of thumb regarding the best time to sell your business. You can use one or a combination of the considerations below, which we will discuss further in another section of the article:

When your business's financial health is on an upward trend
During a market peak
When you have achieved your business goals
If you have hit a plateau
When undergoing incurable burnout or boredom
When you've received a compelling offer
When your business's growth exceeds your experience and resources
When you have significant changes in your life circumstances

Determining whether you should sell can be easy, but deciding the best time for the sale and the steps to sell a business can be confusing.

With Exitwise by your side, you don't have to worry about that. We can get you all the help you need to make informed decisions and sell faster at the best possible price.

We help business owners form their dream M&A team to help with various exit activities, including valuing the business, deciding the perfect timing, and negotiating a better sale price.

Reach out to us today to kickstart the process to an optimal exit.

Things to Consider When Selling a Business

Every business sale is unique, but there are critical universal aspects to consider to help you sell faster, successfully, and at the right time:

Your Readiness to Let Go: Most business owners make the mistake of selling their business when they aren't psychologically ready to let go of it. Ensure your business and personal goals align with your reasons for selling. Your mental preparedness makes the M&A process easier, and you won't have to regret selling.
Professional Assistance: The truth of the matter is that you can comfortably sell your business independently. But how long will it take you, and how much will you get for it? Hiring a team of M&A experts can help you improve the business’s value and sellability score to maximize your proceeds.
Your Exit Options: You can sell a business to your employees through an Employee Stock Ownership Plan (ESOP), financial buyer, business partner, or a single employee. You can also sell the business to a competitor. Look for the most promising option for the highest price and the best survival of the business.
Sticking to Your Exit Plan Closely But Wisely: The best time to start exit planning is when you start your business. You'll want to stick to your plan closely but wisely so you don't pass up opportunities for a more favorable sale while waiting for the targeted exit time.

How Much Can You Sell Your Business For?

Your business can sell for hundreds of thousands to billions of dollars.

The factors that affect the sale price include the business's financial health, growth potential, concentration of customers and suppliers, current industry outlook, and business size.

You'll need an accurate valuation from a reliable business valuation service to decide on the ideal sale price. Your business appraiser can use different methods to arrive at a single value or range of values.

For example, if you have $1,260,000 in net assets and $375,000 in net liabilities, here's how to calculate your business's worth using the asset approach:

Business Value = Net assets - Net liabilities

= $1,260,000 - $375,000 = $885,000

You can sell the business for $885,000. However, you should also consider other aspects that can significantly increase the price, such as market share or competitive advantage.

We have a free business valuation calculator you can use to determine how much you can sell your business for based on its value using EBITDA and revenue ranges.

Detailed Analysis - When to Sell Your Business

Here's a detailed look at the aspects to consider regarding when to sell your business:

1. When Your Business's Financial Health Is on an Upward Trend

Buyers want a business with solid profitability and revenue stability.

One of the best times to sell is when your business is experiencing an upward growth trend in revenues and profits.

In addition to examining actual revenues and profits, you can consider other factors that contribute to good financial health. These include better customer satisfaction, operational efficiency, and employee positivity.

2. During a Market Peak

Check industry trends and the state of the general economy to ensure you sell when there is a high demand for businesses like yours.

You can also look out for market changes that could impact your decision and the sale, such as emergent technology and foreign trade agreements.

3. When You Have Achieved Your Business Goals

You can exit the business if you've already achieved the goals you set for yourself when you started.

For example, you may have bridged a gap and established a lasting legacy.

4. If You Have Hit a Plateau

If your business's growth has stalled for a long time, or you've run out of ideas and the drive to take it to the next level, it might be time to sell.

However, you need to diagnose the problem first to learn the underlying causes and only sell if you feel you can't recover from the plateau, but a new owner has the chance.

5. When Undergoing an Incurable Burnout or Boredom

As with the plateau situation, ensure you first diagnose the problem causing the boredom or burnout and only sell if you feel you can't cure it.

6. When You've Received a Compelling Offer

You can sell your business after receiving an unsolicited buy offer that's too compelling to ignore. Such offers show that prospective buyers recognize the value of your business.

However, since you are under no pressure to accept the offer, you can also explore the other option of finding buyers yourself or with the help of an M&A team. If you get a better offer, you can accept that. If not, you can take the offer you received initially.

7. When Your Business's Growth Exceeds Your Experience and Resources

Most businesses usually grow beyond the owner's experience, expertise, and resources. You can sell at this time to avoid a stall and to preserve your legacy.

8. When You Have Significant Changes in Your Life Circumstances

Change is constant and inevitable, and you may undergo formidable situations that affect your ability to run your business effectively.

For example, you may face a divorce, health issues, aging, disability, or even a positive aspect like family growth.

You'll want to exit before the business gets affected by your situation and starts losing value.

Notably, you need all the help you can get to decide the right time to sell your business and how to execute the sale.

Exitwise helps you hire and work with M&A experts like wealth advisors, finance accountants, corporate attorneys, and investment bankers. These experts help you create the optimal exit you've always imagined.

Schedule a consultation with the Exitwise team to start your exit journey today.

How to Sell a Business for Maximum Profit

The following tips and strategies can help you maximize your profit when you sell your business:

Finding the best buyers and qualifying them accordingly.
Working with experts to help you fetch the best sale price possible.
Conducting a detailed business valuation to understand its worth to avoid underpricing.
Strategically timing the sale so you don't sell too early or wait too long to sell.
Showing your business's growth potential using detailed forecasts of sustainable future cash flows.
Presenting a compelling narrative to potential buyers by highlighting your unique selling points, such as competitive advantage.
Increasing the value of the business before the sale by improving financial health, hiring key talent, and streamlining operations.

What to Do After You Sell Your Business

The process of selling a company is usually lengthy and draining, requiring you to have a solid post-sale strategy.

Here's what you can do after selling your business, depending on your goals:

Help the new owner settle into the business as per your transition and integration plan.
Pay off any personal and business debts the new owner did not assume.
Where applicable, stay involved in the business as a shareholder, consultant, employee, or board member.
Invest your proceeds in new ventures within the same industry or a different one based on any non-compete clauses you made with the buyer.
Take time off any business endeavors to relax and enjoy your newfound monetary and time freedom.
Stay connected by maintaining relationships with former business networks and colleagues.
Retire fully to enjoy a lifetime of minimal to zero business activities.
Place your returns in a safe place where you can't withdraw recklessly.
Reflect on lessons learned and identify areas for future growth.
Pay relevant taxes on the sale proceeds.
Pursue philanthropic interests.
Update your estate plan.

Frequently Asked Questions (FAQs)

Let's wrap up with a couple of questions about selling a business:

What Is the Best Advice on Selling a Business Successfully?

The best advice for ensuring a successful business sale is to involve qualified experts to help streamline the entire selling process from the beginning to the end.

The right M&A experts can help you prepare yourself and the business for the sale. They can also help with the valuation, finding and qualifying buyers, negotiating the best terms and sale price, closing the sale, and even transitioning.

You can work with us at Exitwise to find the best M&A experts to help you actualize the exit of your dreams.

What Is the First Step Necessary for Selling a Business?

The first step for selling a business can vary depending on your business, situation, and why you are selling.

Typically, the first step is to prepare yourself and the business for sale. You need to get in the proper mindset, such that you sell for the right reasons and are ready to let go of your beloved masterpiece.

You also need to improve the value of the business to make it easier to attract the best buyers and sell at the highest possible price.

How Long Does It Take to Sell a Business in Today’s Market?

You can sell your business within a month to a year or more.

The selling time depends on the business type, industry, current market conditions, reputation, overall business health, and your preparedness.

What Are the Benefits of Staying on After Selling a Business?

While exiting a business fully is a good idea, staying on offers several benefits you wouldn't want to miss out on, such as:

Having a continued source of income through dividends, salary, or proceeds from a future sale.
Maintaining your business networks with customers and suppliers, ensuring your continued impact in the market.
Leveraging your experience and expertise in a new capacity to increase the value of the business and protect your legacy.
Facilitate a smoother transition for the new owner, which can increase your M&A success rate.
Gradually and gracefully transitioning into new endeavors or retirement, which can help manage the psychological effects of the exit.

Conclusion

In today's guide, we have explored when to sell your business to fetch higher profits. Yyou can use one or several instances to inform the timing, depending on your goals.

If you’re still unsure, we can help you decide the right time for the sale by connecting you with M&A experts who assess your business and the market to arrive at a favorable timing.

We'll connect you with M&A attorneys, financial accountants, investment bankers, and wealth advisors to help streamline your exit process.

Chat with our team now to achieve the exit of your dreams.