If you decide to sell your closely-held business, the timing of that sale can impact your financial future and personal life. The timing of the sale can change how much your business is worth, how easy it is to sell, and how happy you are with the deal. What questions should you consider before selling your company?
Is the market right for the sale?
First, look at the current market conditions. Are businesses like yours doing well, or are they struggling? Things like market demand, competition and the overall economy can impact how much your business is worth. For example, selling during a buyer’s market might not get you the best price. You need to understand the cycles in your industry and the economy to time your sales effectively.
Are your business’s finances on track?
A strong financial history makes your business more attractive to buyers. Think about whether your business is financially strong right now. Check your profit margins, revenue growth, and financial forecasts. Businesses with consistent growth and strong financial projections usually sell for more. Make sure your financial records are clear and organized to make the selling process smoother.
Is your business operating well?
How well your business runs can affect a buyer’s decision. A business that runs smoothly with a good management team and efficient systems will attract more buyers. If your business depends a lot on you, it might be smart to build out a management team to keep the business going after you sell.
Are you ready for a change?
Selling a business is not just about money; it is also personal. Think about whether you are ready to let go. Are you ready to retire? Have you outgrown this venture and want to move on to new opportunities? Think about your future plans and if selling fits into them. Being emotionally attached to your business can also affect your decision, so consider if you are really ready to move on.
Have you discussed the potential sale with professionals?
Selling a business involves complex financial, legal and strategic considerations. Talking to investment bankers or business brokers, financial advisors, and accountants can give you a sense of your business’s market value. Lawyers with experience in business law can help you prepare for a sale and provide advice throughout the sale so that you can make informed decisions and protect your interests.
Is there a buyer?
Assess the availability of potential buyers in the market. Sometimes, you might already have interested strategic parties like a competitor, a supplier, or even an employee. In other cases, you might need to reach out to potential buyers through investment bankers, networks or even brokers. Understanding who might be interested and why can help you target the right audience and structure the sale to be appealing to them.
Could you benefit from waiting to make the sale?
Lastly, think about what could happen if you wait to sell. What are the benefits or drawbacks of selling later? Factors like increasing competition, technological advances or potential economic downturns can impact your business’s future value and how easy it is to sell.
Deciding to sell your business is a multifaceted decision that requires careful consideration of both personal and professional factors. With careful thought and the right advice, you can decide whether now is the best time to sell your business.