Determining the best time to sell a рrіvаtеlу held buѕіnеѕѕ wіll depend upon a number оf fасtоrѕ which are often personal in nature. From a valuation perspective though, the time to sell will be when your firm is operating optimally in five key areas.
The Ideal Time to Sell A Business Is When:
1. Profitability and Cash flows are strong and improving. These metrics are key drivers in determining a company’s value. Valuations are mostly based on past performance and selling a company that’s moving in the right direction is a lot easier than one that’s made a downward turn. A solid earnings history will earn you a higher valuation.
2. Management and Staff are qualified and stable. Management and succession are key. A buyer needs to know the business can run smoothly without you and that employees won’t jump ship as soon as they catch wind of a sale.
3. Customer Concentration isn’t too high and the business doesn’t rely on a few key customers. Just like buyers needs to know your business doesn’t solely depend upon you, they need to know the business doesn’t rely on a few customers. High customer concentrations lead to lower valuations and unfavorable deal terms.
4. Your Company Stacks up well compared to Competition. Ideally, a company is a market leader, has proprietary products, or other advantages over competition. Take a step back and attempt to objectively compare your company to the competition.
5. The Industry is booming, or at least turning up with room for growth and expansion. Market growth lends to opportunities for the next owner and takes away some business risks. Sell when your end markets are in an up swing.
These are all important considerations when selling your business. Seeking advice from a qualified M&A advisor (business broker) will help you assess the strengths and weaknesses of your business and provide you the knоwlеdgе and resources you need to develop an exit strategy.
One of the Most Active M&A Advisory Firms in the Region
VR Business Sales New Haven represents owners of businesses valued between $500,000 and $25 million or with annual revenues from $1 million to $30 million. The office provides exceptional merger and acquisition (M&A) advisory services to companies operating within a wide range of industry segments in Connecticut, Southern New England and Metro NY. Independently owned and operated, the office consistently ranks within the Top 10 of over 50 offices worldwide with the VR franchise network.
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