When is the best time to sell your business?

October 03, 2023

The decision about when to sell your firm is never an easy one. It requires plenty of forethought and planning and there may be a multitude of things you need to consider before you start.

For instance, you may need to think about whether your business is in the right position for a sale, or if it is currently attractive enough to potential buyers. It’s also worth noting that the sale process can take many months, so you need to be prepared for that.

Keep reading to find out what you need to consider when selling your business and why timing is so important.

You need to be mentally ready for the sale

Determining whether you are mentally ready to exit your firm is as important as identifying if the firm is even ready to be sold.

For instance, have you thought about how you would react to not having daily contact with colleagues or feeling a sense of loss after exiting the firm? Similarly, have you thought about how you will spend your time in later life without your business to focus on?

Making sure that you are psychologically prepared for the sale could also help the business appear more attractive and acquirable to potential buyers. For example, if you’re confident about the state of the business and the potential sale, potential buyers may be more reassured in their decision to buy.

It’s important to have fairly concrete plans for what happens next

Linked with being mentally prepared for the sale is the subject of what you have planned after you’ve sold your firm.

If you are selling your firm to help fund your retirement, do you truly know what you want to do? Similarly, do you know how much money you will need to achieve those goals?

For many UK adults, travel is at the top of their retirement bucket list. A survey from Royal London revealed the top five activities for over-55s:

See the Northern Lights (53%)
Travel on the Orient Express (42%)
Visit one of the Seven Wonders of the World (36%)
Live/buy a house abroad (25%)
Go on a safari (22%).

Without some idea of what the next chapter holds for you, it will be difficult to look forward and make plans for what lies ahead. As such, this may mean that you could end up wavering when faced with a potential sale. Worse still, your lack of decisiveness could see you lose the opportunity.

Your business should be truly prepared and ready for the sale

When selling or exiting your firm, it’s incredibly important to make sure that it is in the best possible position for a sale.

You’ll need to make sure that your paperwork is all in order and up-to-date and that you’re able to show your firm complies with all relevant regulations, including Consumer Duty.

Spending time to dot the i’s and cross the t’s now could help to reduce the time it will take for a successful sale to go through and allow buyers to quickly find all the information they need.

Understanding your cashflow and turnover will also make it easier for you to accurately value your firm and attract interest in the business.

Your firm will need to be attractive to potential buyers

Generating the amount of money you need to help you achieve everything you want to do post-sale is vital.

One of the most effective ways of doing this is by making sure that your firm is acquirable and attractive to prospective buyers.

As well as having all your paperwork in order and maximising your cashflow, it’s important to ensure that you have done everything you can to make your firm stand out in the profession.

For instance, if your business is seen as a leader in the sector and you are relaceable, your firm will be potentially more attractive to acquirers.

There will need to be plenty of suitable buyers available

You may be fully prepared to sell your firm, your business might be in the best possible place, and you may be confident in what you have planned.

But, if there aren’t any suitable buyers interested in purchasing your firm, you may not be able to exit your business when you hoped.

Working with experienced exit strategists to help identify suitable buyers is an incredibly important part of the process.

Get in touch

If you’re looking to exit your business, timing is key. As experienced specialists, Melo can help you identify whether you and your firm are truly ready for the sale.

If the answer is yes, we’ll help you sell your business in the smoothest and most stress-free way possible. Email Email hello@melo.co.uk or call 0113 4656 111.