It’s natural to believe/wish/want to think that there’s a perfect moment to list your business. Some owners (most, in fact) would love to sell right after the busy summer season. They’ll finish the season strong, take the profits, and close just when the company is at its peak value. So… they’ll list it right after things slow down.
It’s a great plan, but almost impossible to execute.
That’s because none of us are smart enough to predict when the right buyer and the right conditions will align. The best-case scenario is that we put up the listing and find a qualified buyer on day one. However, even the cleanest and easiest deals will typically take 60 days to close. This means that if you put your company up for sale right after the summer, you’ll be carrying the slow months of fall and winter anyway.
And since so many owners think about seasonality the same way, more companies are on the market after summer, making it more challenging to compete for top dollar from buyers.
Like owners, some buyers also have seasonal preferences. Some would rather make a bid for a company as it’s shifting into high gear for the summer and start off their new ownership with the most profitable few months of the year. Others prefer to buy during the fall or winter, giving them some quiet months to transition the team, do training or technology upgrades, and prepare thoroughly for next year’s busy season.
My point is that there’s no way of knowing. Market conditions, interest rates, the right timing for the right buyer, and even weather patterns that may affect sales and profitability are unknowable. I always advise owners to let go of what you can’t control – all those factors I just listed – and focus on what you can control.
How efficient your operations are, how organized your books and files are to make the diligence process less stressful and complex, and how well-positioned your company is for an easy negotiation and closing. Most importantly, what number will seal the deal for you? You should be ready to pull the trigger when you hit that number, no matter what time of year.
So when is the perfect time to list your business? When you’re ready to sell. The owners who get the best value for their companies don’t worry much about seasonality. They often have a timeline that may include months of planning, strategizing, and investing time and resources in the issues that increase value and make the business more attractive to the right buyer. They fix what’s broken and tighten up what needs to work better. They get their books in order and ensure they fully understand their company’s value in the current market.
They hope for the best-case scenario—a fast and clean closing—and they prepare for the less attractive outcome, waiting longer for the right buyer with the right offer. Either way, they’re focused on keeping their foot on the gas pedal, making sure the business is running well and staying profitable.
They count on their broker to help them find the right buyer and make the best deal possible.
To get to the top of the market, you have to be in the market. I was in finance for years before I started this business, and we learned how hard it was to beat the market’s average gains. If you stayed in the market for over 30 years, you would probably get a solid 10% return on your investments. But according to Hartford Funds, if you missed the market’s ten best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by 83%.
Don’t try to game the market. If you’re ready to sell, let’s talk now.
