The timing of a business sale

It is rare to sell your business at exactly the right time and how do you measure if the timing was correct in the first place?  When people wonder if they are selling their business too early, it is appropriate to consider another question.  How much more potential does this company have to grow?  We can then start thinking about what is holding the company back and what sort of time and money it would take to overcome the barriers keeping the company down.  As a business owner you have a few options.  Realistically, there are three main choices when it comes to selling a business that is profitable (depending on size): 


Sell 100% of the company

Sell 10% to 90% of the company

Keep 100% of the company


So, as you can see in the above list, owners who have a good business, who believe it is time to sell, have to make one choice, namely, who could be interested in buying into this company?  To many this is the most pertinent question.  Introduce it too early and you risk the owner not being included in the process of concluding that there might be a few interested parties with separate motivations.  For example, there are the employees of the business.  They may be interested?  There are the competitors who want to increase their market share or add more capability.  They would be mainly interested in control and 100% ownership.  Following that there are private buyers and investors who could help drive the company to its next level of performance.  They may be interested in +50%, but not always requiring control.

Once a group of suitors are considered and have been determined, the next step is to understand the mechanics of what a deal with any of these parties might entail.  The rest is purely about both the buyer and the seller working out how they can increase their own yield.  Too often a divisive approach is undertaken between advisors and lawyers of a sale and purchase transaction.  The key for business owners and private buyers is to aim for a position of spirit, collaboration and cooperation as opposed to confrontation which can usually be adopted too early in the negotiating process.

So the choice comes down to what is your best option of the three and then getting the mechanics behind the deal into a collaborative position to assist both the buyer and seller.  If your business is profitable it is best to take as long as is reasonably necessary to ensure that the process is planned, executed and in your best interests upon possible cessation of your commitments to the company.

If you require any assistance contact Alert Property Group.