Selling your business isn’t easy.
The process itself is laborious: You need to get the business appraised, get it in the best financial shape possible, get the timing right, and put a mountain of paperwork in order.
And of course, there’s the personal challenge. Building a business takes blood, sweat, and tears, and saying goodbye is never an easy decision.
I’m in the middle of selling one of my businesses right now. I can tell you that, despite all these challenges, there absolutely are times that you should sell your business—even in a tight macroeconomic environment.
5 signs that it’s time to sell your business
You don’t have to see all these signs at once. One or two, if they’re strong enough, can be plenty.
1. Your business is gaining traction. This might sound backward, but profitable and growing companies sell for more money. So if you want the most for your business, it is important to sell when things are going right. Selling your upward-trending business lessens the business risks moving forward and secures your financial future.
Keep in mind, just because you sell your company doesn’t mean you have to walk away. Often, as a transition, former owners stay on and help keep things moving in the right direction. You can even transition slowly out of the day-to-day, giving yourself more time to work on other projects and ventures. Plus you’ll have the capital now too.
2. You’ve got a durable business in tough economic times. It might sound counterintuitive to sell in a tight macroeconomic moment (like our current one). But the reality is, merger and acquisition (M&A) activity doesn’t disappear during economic contraction.
In fact, private buyers are even hungrier for solid, profitable businesses during tough economic times than during boom times. If you’ve got a strong team, a strong brand, profitability, and an affordable price point, you command a lot of negotiation power during recessions or recession-like periods.
3. A good partnership opportunity presents itself. The right partnership can help you grow or pivot in a way that would be impossible to do on your own. Maybe you’ve got a great brand, and another company has strong tech that could bring your product to the next level. Or, maybe there’s an opportunity to merge customer bases by merging and expanding the value of your offerings.
4. An incredible offer comes out of the blue. Maybe you weren’t even thinking about selling. You’re enjoying the work, things are running smoothly, and suddenly, an offer comes out of nowhere that opens your eyes.
Great offers don’t come along every day. In moments like this, you have to think very carefully about whether a) You can see yourself being satisfied without running this company, and b) Whether you’re likely to get an offer of this kind again (and when).
You want to walk the fine line between looking a gift horse in the mouth and jumping at an opportunity that only seems like a once-in-a-lifetime chance.
5. You’re ready for the selling process. The last thing to consider is whether you’re ready to undertake the long and complicated selling process. The process (which takes anywhere from six months to two years) includes strengthening your business’s financial health, getting an appraisal, deciding whether to work with a broker, prepare a slew of documentation, find a buyer, negotiate…and much more in between.
Understanding the volume of work and putting plans in place to handle it while also running your business is crucial.
As you can see, there’s a lot to consider before deciding to sell. The overarching point: Don’t sell compulsively, out of fear, or out of greed. And don’t expect it to be a speedy process—just like building a business the right way, selling it the right way takes a lot of dedication.