Chances are if you do a few internet searches you will see plenty of advice when it comes to identifying the best time to sell your private business as well as the many steps involved in preparing for a sale. In fact, there are also numerous books available that go into detail on the art of timing as well as preparation. One such offering is – When is the right time to sell my business? – by Richard Mowrey. Most tips and recommendations on the topic of time selection center around the following: select a time at the intersection of when your business is out performing, when the economic cycle is cresting, when your industry is prospering, when most political factors are neutralized, and most importantly – when your financial targets and your emotional checks have all been registered. So how often do all these match-up? It does happen, occasionally, but only for the prepared.
You should be preparing your business for sale every day!
Selling a private business is a process (sometimes years in the making) that takes a lot of planning, advice and preparation. The truth be told however, a lot of business owners don’t get to pick the time, but rather the time picks them. This unfortunately happens often, and most business owners are totally unprepared. The time can come in many forms: health emergency, family death, an unsolicited offer from out of leftfield, an unforeseen major event (think COVID-19) or a rapid decline in the economics of your industry vertical. Any of these events can shock even the best planners and most prepared owners. Unfortunately, most business owners are fully consumed with meeting today’s objectives without much time to fully analyze what the future might look like. That is why we suggest you should manage your business like it is for sale – each and every day. By doing so, you’ve got most of the “prep” work done or at least you have considered the factors.
Major tasks to consider:
In managing your business as if it were for sale every day you should optimize all of the following: seek continuous improvement in your product or service offerings, make sure staffing and operational requirements are planned, update systems and all accounting records on a scheduled basis and continuously invest in equipment and facilities to foster future growth. A business continuity strategy should also be considered with specific milestones for your replacement whether that means grooming an heir or preparing a key manager to fill your place. On the personal side of the equation, you should continuously meet with your financial advisors and recalibrate as necessary to know what your financial objectives should be and what you need to do to get there. Finally, and often overlooked, is the full gamut of emotional issues to deal with. Thought should be given to how your family can be well secured in the event of a personal health issue, or on a more optimistic note, what you’d like to do moving forward: a second career, new hobbies, opportunity to serve or general travel and leisure activities. Any of these paths are good ones to take, but they are most viable and accepted when you’ve had a fair amount of time to contemplate them beforehand.
When the time arrives, whether it be a planned process or an emergency, with most of the preparation behind you, you can now reach out to your legal, financial and M&A advisor to secure the most successful outcome for your business sale.