When is the Right Time to Sell My Business
By Curt Cyliax
Strategic Exit Advisors, LLC

There may never be a perfect time to sell your business. While there may never be a perfect time to sell, there are factors which influence when "it's a good time to sell".

Generally speaking the best time to sell is when everything is going well. But face it, if things are going so well, why would you want to sell your business? You won't. That's why it's such a difficult question to answer. Every business owner has different motivations for making a change. Owner's typically consider selling after a major change has occurred; they've lost a big customer, sales have declined, or a key employee leaves, goes to a competitor; or better yet becomes a new competitor! But will a Buyer buy what's not there any more? Not likely! Buyers have greater access to information and are much better informed today on purchasing and maintaining business value. There are also Buyers who manipulate the buying process to their advantage; or the "professional" buyers; forever looking for the proverbial "right business", but never buying. Put yourself in the shoes of a Buyer. Are you willing to pay a premium for a business which is declining? The answer is no!

There are two types of factors which influence the salability of your Company and determine when the right time to sell has arrived. There are factors you can control and factors out of your control. Factors outside your control which impact value include, the desirability of your industry, the economic outlook for your company, the availability of capital, and cost of that capital. These areas you have little or no control over. Acknowledge their influence in the larger scheme but realize you probably can not affect them; they are out of your control! And, begin to focus on areas which are within your control. Answer these questions about your business to see if it is prepared to be sold:

• Can the business continue with me out of the picture?
       o Am I too critical to the business?
  
  
• Has the business strategy been one of minimizing taxes?
       o Is my tax return off? Do I need to change the way I do business?
  
  
• Have I made changes necessary for the business to continue to prosper?
       o Have I put off reinvesting in the business and it's declining?
  
  
• What has changed in the competitive environment?
       o Industry consolidation, super stores coming to my industry?
  
  
• What is the legal tax entity of the business?
       o C vs. S Corporation, How do I minimize the tax consequences?
  
  
• Are there changes I might suggest to a "New" owner?
       o Don't wait make those changes today!
  

All businesses experience business cycles with peaks and valleys. Very few businesses consistently improve sales and earnings year after year, have experienced employees who stay year after year, with customers that never look at purchasing from competitors, and suppliers that never change. It's critically important to keep an eye on the future and develop an exit strategy for your business. Keeping your business prepared today, no matter what size business you operate, will make it worth more down the road. You may consider streamlining your business, or perhaps buying a competitor to increase the profitability and value of your business.

It is important to have an exit strategy and prepare yourself and your business for exiting. Most Owners only sell once, so you want to make sure it's done the right way to maximize your investment!

The only correct answer to the question "When is the right time to sell?" is when you have prepared your business to be sold.

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