How do I know if it is a good time to sell my business?
This question is not as easy to answer as it might seem. There is no simple way to answer whether it is a good time to sell your business because there are multiple questions you need to ask yourself first.
First, what are your motivations to sell your business? If you have to sell, you are statistically more likely to take less in order to experience a quick sale. If you don’t have to sell right away and can take time, prepare the business for an exit, and continue to run the business in the usual profitable manner, you are more likely to walk away from the closing table with a pleasing return on your investment.
Is the business ready to go to market? Has there been a downturn, explainable or not, in the financial performance of the business? Are there supply chain, employee or other issues plaguing the business at this time? Is there a surplus of obsolete inventory or assets on the balance sheet that have to be addressed prior to taking this business to market? These are only a few of the challenges that a business owner can face prior to taking a business to market. And some of them can be overcome. This is why the best thing you can do to prepare is to have your Advisor arrange for a valuation to establish the current value and answer this question. A valuation can help flush out trouble areas that could adversely affect the purchase price at closing, and possibly be worked on prior to taking the business to market.
Is the current economic environment a good time to sell? This is a common question asked right now. I have been brokering businesses since 2008, which was another time of recession when financing was hard to get and businesses were experiencing rising costs and interest rates. One thing I have observed is that good businesses still tend to sell in any environment. Even with the rising costs of capital, there are market conditions that still make it advantageous for strategic partners, Private Equity Groups, or qualified investors to purchase a profitable business. The best advice here is to get the current valuation, and decide the timing that best suits your needs. If you are burnt out or really want to retire, and you put it off, you may run the risk of taking your hand off the proverbial wheel and letting some of those drivers of value in your business suffer, thus decreasing value.
Whatever the case, being ready and armed with current value and what your future goals are is a good start to getting to where you want to be. Start that conversation with your Business Broker or M&A Advisor today to get the ball rolling. In this case, knowledge truly is power.
By Ralana D. Abraham-Miller, Managing Partner
XGO Business Brokers and Advisors
Email: Ralana.abraham@xgoadvisors.com
Phone: 317-245-4912
Book a call with Ralana Abraham-Miller
Ralana is an almost 20-year veteran of the business brokerage industry, with vast experience in marketing and selling small to lower middle market businesses in the Midwestern, US. Ralana has been behind the desk in orchestrating comprehensive confidential go to market strategies as well as in the trenches with her clients as a Business Broker with more than a dozen successful deals to her credit. She is a passionate advocate for the businesses she represents and the entrepreneurs she is privileged to assist. Having been in a family business, she knows first hand the challenges, triumphs and pitfalls a business owner and their family experience.
In her role as Managing Director with XGO Business Brokers and Advisors, Ralana strives to bring that same passion and energy to the brokerage division. This focus and injection of industry expertise coupled with XGO’s legacy of strong customer service, extensive professional network and emphasis on teamwork and support from its parent company GO Services are a winning combination, making XGO truly the GO TO Market Advisory firm.
XGO is a Business Brokerage and M&A Advisory firm focusing on deals in the small to lower middle market range around the country. XGO’s headquarters is located in Carmel, Indiana. With their extensive network of associates, they can provide a range of best-in-class brokerage services throughout the US. If you are considering a sale now or in the future, please feel free to reach out for an exploratory conversation.