When Is The Right Time To Sell Your Business?

When Is The Right Time To Sell Your Business?

One of my favorite shows is “The Office”, I’ll leave the humor out of this post, but the show only exists because the original creators took a chance at producing “something new”. Does anyone even care or know what they did before? What made Simon Cowell so famous in the United States was not producing Teletubbies, but telling contestants the truth on the hit show, American Idol. He’s onto something new now, and we’ll probably all take some time to watch.
Business is picking up. Things are looking good. Your sales team has really delivered. But you wonder, is now a good time to sell your business? How does one do that exactly?

Are you ready to do something new, personally? Has the seven year itch gotten your interests peaked in a new past time, something that is going to consume the void where your business has lived.
Is your team comfortable with trying to roll out new products and services? Do you have an army working along side you to consider new opportunities?

When is the right time to sell your business?  First of all, you’ve got to ensure that you’ve got something worthy of selling. Have you done enough corporate financial planning to realize your potential? That EBITDA number really matters!

Can your business exist without you there running it? Do you have the ability to “take the summer off” and have things not implode while you are gone?

Can you articulate and then leverage the two most important things required to grow your business? Can someone else do it, besides you? Hopefully you are no longer your number one sales person. Or number two. Or number three.

Are your employees willing to stay after you have left the business? The acquiring company probably is going to want to keep most of them around. Make sure you’ve got plans in place to keep them happy, and productive! Not to mention in place as your backup retirement plan! Make sure you’ve fostered a corporate culture that your employees know that you appreciate that they are smarter than you, that’s why you’ve hired them. You were the risk taker, but they are the future of your business.

Most importantly, understand that your business is only worth what someone is willing to pay at a given point of time. Someone is only willing to pay what they can finance, and at the end of the day, your aren’t going to be paid based on future value, but whether the current state cash flows of the acquiring entity plus your business cash flows can support the consolidated company plus the amount financed to buy you out. Their plans and vision for your business probably surpass your own.

But never forget, deals fall through. Never take your eye off the prize, but be smart about it. Be realistic. It’s always good to have a financial buyer lined up, or a management team ready to take a stab at buying your business, just in case the big spender was a lot of talk, and no substance. Better yet, smarter yet, know the number that each can achieve so if your deal falls through, you’ll have options.

Download The PDF White Paper By Lantern Capital Advisors:
Corporate Finance:  Financial Planning Steps For High Growth Companies