Selling A Business - Is Now A Good Time?

Is now a good time to sell my business?

Lately, this has become a very common question I receive from owners considering selling their business.  I’m sure their initial concerns are about timing the sale with an increase in the overall climate of the business sales market.  Although you want to consider all factors when selling your business, the answer has less to do with market conditions and more to do with the current state of the business for sale, as well as the owner’s reasons for selling.  Briefly, I will discuss these three factors and how they impact the timing of a sale.

Overall Market Conditions (Not so Important) 

Although there have been changes in the business sales market, by carefully studying business sales statistics from the last 10 years we see that, when considering the final sales price relative to Sellers Discretionary Earnings, there has not been much fluctuation in sales price despite changes in overall economic conditions.  The number of businesses that sold for higher prices (between 2 and 4 times discretionary earnings) has not varied more than 7% over the entire 10 year period.  Relatively speaking, what sold for a good price (comparative to the Discretionary Earning), in an overall weak economic conditions, brought a similar price for during a stronger economy.

State of the Business (Important)

The current condition of your individual business is a significant factor in timing its sale.  Businesses that show a strong track record of steady or increasing sales and profitability will always sell faster and for a better price than those that are in a decline.  If your business is up or steady, this is a better time to sell.  No matter the global or macro economic factors surrounding your company, if your business is up, the demand for it and the sales price will follow.

Goals of the Owner (Most Important)

The personal goals or circumstances in the lives of the owners are usually the most important factor in timing the sale of your business.  Whatever the reason for the sale of the business (distress, retirement or health being the most common), if it is the right time for the owners, it is usually the best time to sell.  By waiting or delaying the sale as a result of speculation about current market conditions the owners may be putting themselves in a bad position.  I have many sad stories of owners who have underestimated the time to properly market, sell and transfer a business.  They waited too long to begin the process and found themselves in a highly compromising situation as they went to sell their company.  The amount of time an owner has to sell their company will directly affect the way it is marketed and priced.  The more time you have the better.  In a worst case scenario, time can destroy the chances of selling your business for a fair price when you are faced with a drop dead date on which to have the business sold.

In summary, as you think about selling your business, all of your goals should be considered, however, it is always better to begin the process early and make sure you have plenty of time to do the job right.

Categories: Selling A Business

Comments Regarding This Blog Post

These are great points. The "right time" is dependent upon the individual owner as opposed the selling climate. Some businesses may have a better time selling when they are in their peak periods, such as a tanning salon is busier in the fall/winter, because during spring/summer, people have access to the sun for free and so business may be slower. A buyer should be made aware of selling trends, but businesses often take months to sell, so putting it up for sale in a certain month won't really affect it's chances, because of the length of time deals take to close. A seller should know their motivation for selling and exit strategy for when they sell.

  Helpful Resources To Assist In Selling And Buying California Businesses
Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Mike Hurrell, Broker: Laundry Specialist - Southern California

Providencia Properties Inc in association with Golden State Laundry Systems is a full service Coin Laundry Real Estate Broker. At GSLS you will receive personalized attention from our professional staff of coin laundry experts. To sell or buy a Southern CA laundromat call Mike at 310-223-2240 X209.

Lee Petsas, Business Broker: Southern California Area

Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

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