Some business owners face an unfortunate reality – external circumstances force them to sell their company before they otherwise would. Divorce, family emergencies, poor health, and financial instability all create the need for a quick exit or liquidation. The majority, however, get to choose their time. We’ve written extensively on the subject of timing the sale of a company, and we firmly believe that company and market factors outweigh personal factors when it comes to making this decision. That said, personal factors can’t be ignored.
Most business owners invest a substantial amount of time and money into their companies, to the point that they become an extension of themselves. To some, selling means giving up part of who they are. So, how do you know if you are ready?
You find yourself saying “If someone offered me __________________, I’d sell it to them tomorrow”. This is a telltale sign that you’re ready to sell, and now it’s all about negotiating the right number. If you find yourself saying this, it’s time to take the next step. At the very least, test the waters to determine how close you can get to your number.
You know exactly what you would do tomorrow if you didn’t have to show up to work – and you can afford to do it. Financial planning is critical to readiness. When you sell, you receive a lump sum in exchange for the annual income your company generates. Does the sale price combined with your retirement savings allow you to live the life you want for the next 20-30 years?
You love what you do but you hate the burden of ownership. Selling your company doesn’t always mean retiring. In some industries, corporate buyers and passive investors buy companies that have owners willing to continue running the business for them. This allows you to keep doing what you enjoy without the stress and extra hours required of an owner. If this is not an option, selling can give you the means to pursue a second career.
You don’t have a passion for your business anymore. If you are not passionate about what you do, your business will begin to suffer. Things might not be noticeable at first but over time your business performance will decline, making a successful sale, on your terms, much harder to accomplish. If your passion is gone, you probably need to start exploring your exit opportunities now to ensure full value for all your years of hard work.
Your personal goals changed, and owning a company no longer helps you accomplish them. What you want today may be very different from what you wanted 30 years ago. This is perfectly normal, and if you’re unable to obtain the work-life balance you desire then it’s probably time to sell. Whether your new goals involve travel, relocation, or just a return to a 40-hour work week, make a change now before you begin to lose motivation, thus hurting your chances to go out on top.