As business owners, we want to reap the benefits of our businesses doing well for as long as possible. However, when you are planning a strategic exit it might be smart to sell at the peak of your business's performance. Although that seems counterintuitive it can be an ideal time to sell your business because of the reasons we have outlined below!
Highest Valuation. Valuations of companies are typically based on the past three years of financial performance. If your company has had three strong years of business than its valuation will be high! Could it get even better? Yes, there is always that chance, but you risk having a slow growth year, or worse, a declining sales year. Both of these outcomes will significantly decrease the value of your company.
Forward Momentum. The company has strong momentum and if you expect it to continue, you will be setting the next owner up for success and a good transition. Besides it being the right thing to do, setting a buyer up for profitable years to come can mean a better chance of repayment on seller notes or a higher earn out if your deal structure includes either.
Available Financing. A strong financial performance opens more financing opportunities for buyers interested in acquiring your business! This will reduce the amount of or the likelihood that the deal will include a large percentage of seller financing. Ultimately, giving you more cash at the closing table. Many industries - and businesses - are at their peak performance right at this very moment!
Historically, we see seven-year economic cycles that have some blanket effect on all businesses, no matter their industry. The peak of this economic cycle is now making this the ideal time for owners that want to exit in the next 2 to 5 years to consider selling. Waiting to sell may mean waiting for another peak in the cycle seven to eight years down the road. Is that a risk you are willing to take?
If you are interested in speaking with one of our professional business brokers and wondering, "Should I sell my business?," please visit our website or schedule a complimentary consultation today!
Jessica Fialkovich operates as Transworld's President, overseeing strategic planning, marketing, and support services for the company. She possesses a Certified Business Intermediary (CBI) designation from the International Business Broker's Association. After over a decade of buying, building and selling successful businesses in the wine & spirits and retail industries in both Colorado and Florida, Jessica established Transworld Business Advisors of Colorado to employ her passion and experience in business by guiding others in their entrepreneurial quests. Outside of Transworld, she is involved with Junior Achievement-Rocky Mountain and the Denver Metro Chamber. Jessica has a passion for outdoor recreation and enjoys spending time with her husband, and dog, Sailor!