Posted on behalf of the firm on 19 October 2014.
In this blog, we have talked about many of the different aspects around selling a business, such as how to get started, good first steps to take, where to start looking for buyers, etc.
One very important question we have not covered yet is knowing when to sell your business. Timing can be crucially important, easily as important as any other factor. It’s not an easy problem to solve, though.
Take the following scenarios, for example:
- Business 1 has been around for a decade, and has been moderately successful for years. Lately, though, things have slowed down. Either the market has shifted, the owner has lost steam, or the slow inevitable changing of the tides has caused clients to slip away one-by-one. No matter what the cause, the business has begun to slowly fade. In this case, it might be time to find some new blood to re-invigorate the business before it declines too far.
- Business 2 has hit some hard financial times recently (perhaps due to a temporary market slump), and has been slowly piling on debt after debt trying to stay afloat. The owner has likely been pumping some of their own money in to keep the doors open. In this case, rather than let the business potentially take everyone down with it, perhaps start looking for someone with the patience and finances to ride out the slump, or some guru with the experience to pull it back from the clutches of death.
- Business 3 has gone through some slumps and slowdowns, but has turned the corner to profitability. This may seem like the worst time to sell a business, but there is often a lot more going on behind the scenes than just the accounting sheets. Is the owner’s heart still in it? If not, might be time to change owners. Is the market inherently cyclical? If so, it might be time to look for a buyer while the market is hot.
Regardless of the circumstances of the business, there is always a right time to sell a business. It may be hard to spot, but if you are ever curious, do not hesitate to get in touch with a skilled business attorney. They will be able to help you understand the current market, the value of your business, and any extenuating circumstances they can find.