When is the Right Time to Sell Your Business?
WHY TIMING MATTERS
Only 15‑30 % of small businesses that go to market ever close a deal, but those odds improve dramatically when owners work with an M&A advisor on strategic pre-sale planning. 74% of very small businesses actually do zero exit planning.
Timing your sale is about aligning three green lights:
Personal | Financial & lifestyle goals
Business | Performance & readiness
Market | Economic, industry & capital‑market cycle
If two lights are green and one is flashing yellow, you might still sell—but you’ll negotiate from a weaker spot.
1. Personal Readiness Check
Rule of 130 – Add your age to % of net worth tied up in the company. If total is 130 or more, it’s time to diversify.
Energy & passion – Burnout is real. Buyers sense disengaged owners and may discount price.
Life events & horizon – Retirement, relocation, health, or partner buy‑outs can all dictate timing.
Post‑sale plan – Know what you’ll do next; second thoughts can derail a deal late in the game.
Founder tip: Start informal wealth planning at least two years ahead so tax moves or estate strategies have time to season.
2. Business Performance Signals
Sell when the company looks strongest—not after decline sets in.
Up‑and‑to‑the‑right numbers – Trailing‑12‑month revenue and EBITDA should be stable or rising.
Diversified customers & vendors – Lower concentration risk commands higher multiples.
Documented processes & team depth – Demonstrate that the company runs without you day‑to‑day.
Clean, reviewed financials – Three years of accurate statements and—ideally—a sell‑side Quality of Earnings study can lift valuation multiples.
Asset condition & tech stack – Modern equipment, software, and facilities signal less cap‑ex risk to buyers.
Regulatory & legal house in order – No looming lawsuits or expired licenses.
3. Market & Economic Timing
A healthy macro backdrop magnifies good company fundamentals. Here are some positive indicators and why they help.
Low‑to‑moderate interest rates ➔ Cheap debt lets buyers pay higher prices
Strong industry cycle ➔ Growth stories fetch premium multiples
Robust buyer appetite ➔ More bidders = price tension
Ample capital (PE dry powder, SBA loans) ➔ Financing friction falls
Favorable tax policy ➔ Lower capital‑gains rates leave you more after‑tax proceeds
The sweet spot in the market is when revenues trend up, industry tailwinds prevail, and capital flows are liquid.
4. Special Triggers That Can Tip the Scales
Unsolicited offer at an eye‑catching multiple – Even if you weren’t ready, the market may be telling you valuations are peaking.
Regulatory clouds or looming tech disruption – Better to exit before headwinds cut margins.
Major cap‑ex on the horizon – If the business needs a costly plant upgrade, a strategic buyer with deeper pockets may pay you today and shoulder that spend.
Personal risk tolerance – If 80 % of your wealth rides on one illiquid asset, the math alone may argue for diversification even in an average market.
5. A Simple Timing Dashboard
Rate each factor 1 (weak) – 5 (strong) and revisit quarterly.
Personal enthusiasm & energy
% net worth in business (Rule 130)
Revenue / EBITDA trend
Customer diversification
Management depth
Industry growth rate
Capital‑market sentiment
Interest‑rate environment
Tax/regulatory outlook
A score above 32 suggests conditions are leaning in your favor; below 24 means more prep may be wise.
6. Common timing mistakes to avoid
Waiting for “one more record year.” Declines often follow peaks; buyers pay for future upside, not past glories.
Trying to time the macro perfectly. Aim for a good market while the business is humming, not the absolute top.
Ignoring buyer financing. Rising rates can shave 1‑2× EBITDA off valuations.
Letting tax policy surprises you. A future hike in capital‑gains rates can cut net proceeds overnight.
Pulling back on investment too early. Cutting marketing or deferring maintenance ahead of a sale hurts value more than it saves cash.
So…is now the right time?
If your personal goals, business performance, and market window all look favorable, the answer may be yes. If all categories are not in order, it may just be the moment to begin the process - to strategize, fix gaps, focus on improvements and monitor the market.
Founders Exit Group specializes in high-touch sell side M&A for small companies. We’ll help you:
Benchmark your valuation against recent deals
Assess your market timing risks and opportunities
Build a custom exit roadmap that meets your life and financial goals
Timing is everything. Schedule a confidential, no‑obligation call with one of our senior bankers to see whether this is your optimal window—or what to do now to be ready when it opens. Let’s make sure you exit on your terms.
