When is a Good time to Sell my Business?

Published on February 21, 2024

When is a good time to sell my business? This question often comes up in conversation. Shawn, we're thinking of selling our company, maybe this year, next year, or maybe in a few months, but we don't know when the best time would be... What are your thoughts? This is a loaded question with a lot to consider. Let's first look at those things that are not in your control and those things that are, but even before looking at that picture, let's pause for a second to think of why one might be considering selling.

If the sale is planned out, it will take, in most cases, one or two years to get everything in order. All the company's processes fully documented, the value drivers pushed, the strategies with the financial and tax advisors thought out, and the rest of the transaction team gathered and prepared. This is not the reality in most situations; in most situations, there's a death, disease, or something traumatic happening in the owner's life, and they must sell it in a shorter amount of time than they want.

With that on the table. When you go to market and it's planned and when it's not, are two very significantly different situations. If it's planned, you have more control over everything because you can wait for opportunities to improve, but if your situation is urgent and you have to sell, there are still things to keep in mind that can help in your overall success, and we will talk about those.

Let's first look at some significant things that could happen that are not in your control.

Overall market conditions: if the economy's going great and everyone's excited, you might get a higher multiple than if everything's doom and gloom and people think there's a massive crash.

Interest rates. Consider borrowing money at a very high rate versus a low rate. With interest and market sentiment, how much will your buyer spend or want to spend on your business?

The competitive landscape. Are a lot of competitors coming in? Are they buying up everything in your industry, or is it dying?

Laws. Are there changes that you don't know if what you're doing will be around or even legal in a couple of years?

There are many big-picture things you don't have too much control over. If you have time, you can wait and make adjustments, such as bringing in some experts to reposition the company or make strategic changes internally to try to compensate and adjust the sails with the direction the wind is blowing.

Moving the Deal Forward

Now, let's say you must go out to the market ASAP.

For now, let us ignore what you don’t have control over, and let’s look at the things that stay constant year in and year out and should be considered in the planned and unplanned scenarios…. It’s time to focus on… The Calendar.

What do I mean by this?

What does your calendar look like in December? Will many people look at opportunities that month or do you think they'll be closing out things for the year-end? What about that first week in January? Do you think those private equity buyers and family offices will be scanning that inbox in detail, going, okay, let’s take on a new project right away, or will they be recovering from the holidays? What about August? August is a travel month for a lot of people. A lot of people are out of town. Is that the best time to go out to the market?

Think of your life and calendar, and now project that to the potential buyers and what they think and see. Once you can view the deal from their side of the table, you can use that to strategize your side.

There are entire months and times of the year to avoid, but what about individual days?

What if you wanted to go out to the market and it was a holiday? That initial email blast, those initial phone calls, who will pick up if it's a holiday? Who's going to be responding?

Let’s project that, not just in the USA, but what about global holidays?

For example, Spring Festival. That's a big holiday in some parts of the world where nothing's happening for a week or two. Is that a good time if the potential buyers are based in one of the countries where this is a significant holiday for them? Probably not.

As mentioned in past posts, a transaction takes time (say 6-9 months). With that knowledge in advance, have you considered lining the transaction with your family's calendar? You will be more involved in some steps in the process than others. Let's imagine that in March, you always have a family reunion. If you plan incorrectly, you may be unavailable to attend the big family gathering that week because you must be at the company for transaction meetings. What will your family think? Will that lack of planning cause some stress? Will that stress impact the deal?

Could the timing have been planned better….in all the examples above…. YES!

Aligning Calendars with the Transaction Process

There are many things to keep in the back of your mind when planning on going to market with a company. It is best to sit down and, with your team, write out the timeline and give yourself flexibility around certain times of the year. I have other blog posts where I talk about the whole process from beginning to end, whether a passive or very active process is run, and all the steps taken. By laying out cultural calendar norms, holidays, and your personal calendar with the steps in the selling process, you can put yourself in a stronger position than someone who wings it.

In conclusion, there are many things you cannot time when going out to the market to sell your company, but there are consistent things on the calendar, such as travel, holidays, and personal celebrations, which can be planned and, if done properly, may significantly impact the process and the transaction's success.

*** The content is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional(s) before entering into any M&A transaction. ***

For More Information

Shawn Flynn is a Principal at Global Capital Markets, a premier middle-market investment bank with a global presence. Shawn has expertise in mergers and acquisitions, capital markets, financial restructuring, and secondaries. He speaks Mandarin and is the host of the award-winning Podcast The Silicon Valley Podcast. Connect with him on LinkedIn.

Shawn Flynn, Principal SF@GlobalCapitalMarkets.com

Tel (415) 578-1445 Ext. 4

About Global Capital

As a middle market investment banking boutique, Global Capital provides mergers and acquisition advisory services, access to corporate debt and equity capital, and strategic advisory services to successful middle market companies. For over twenty five years, our team has offered companies a unique blend of sophisticated financial expertise and access to the global marketplace of buyers, sellers and financiers.

Securities offered through GCMI Securities Corp., member FINRA and SIPC, and a subsidiary of Global Capital Markets. Please reference GCMI Securities Corp. and its team at BrokerCheck.FINRA.org