The short answer is: Sell when your company is saleable and attractive to your ideal buyer.
This article is for owners who have a business with sales of more than $5M and an earnings margin of more than 5%.
Let’s evaluate whether this is your right time to sell by looking at when you should not sell.
Check all that apply.
If you check even one or more boxes, then read Should I Sell Now?
- The company year over year trends show that growth in sales is uneven rather than trending up.
- You expected to grow this last year or two but then the economy or other factors prevented that growth.
- Gross margin is less than 35% of sales.
- Gross margin is the same as or less than your industry peers.
- The owner(s) and their knowledge and experience and relationships are essential to the business and there are no capable Number 2s capable of taking over.
- The owners don’t want to work for the next owner.
- There is debt on the books, and it has been rising over the last few years and/or hard to pay off.
- You are fed up and/or tired of the day-to-day problems. It’s time for you to get out.
- Your industry is being challenged by outside forces that you have yet to resolve strategically inside your business.
- Your products and services or how they are offered as a value proposition haven’t been innovated and improved in the last year or so.
- You serve a wide variety of target markets vs any particular target market niche very deeply.
- Your management team doesn’t have the authority to make decisions for their area of responsibility.
- You have practiced discounting to win business.
- You don’t use key performance indicators to measure the effectiveness of your management team’s strategic decisions.
- You are relying on a professional valuation number or range to tell you how much your business should be worth.
There is a reason that fewer than 20,000 companies in the lower middle market sell each year despite the fact that 2,000,000 company owners in North America say they are going to sell each year.
You now know a few of the reasons why acquisition numbers are so low despite the fact that $5 Trillion in wealth is on the hunt to buy businesses.
If you want a better return on investment from the effort of selling your business, you need to educate yourself about how to play the mergers and acquisitions game to win. Get in touch to learn about our Decision Road Map, after you read Should I Sell Now?
