When is the Right Time to Sell?
A key test for any entrepreneur is determining the right time to sell the business. Entrepreneurs must consider whether their company is at the right stage to be sold and whether they are ready to let it go, especially after investing so much time and energy to make it successful.
When I first started my company, I set a goal that I would exit the business by the time I was 40. At the age of 38, I started receiving unsolicited offers, but the timing wasn’t right since I had not fulfilled all of my initial objectives.
Once I had achieved the bulk of my objectives and realized that the company was ready for the next phase, it was time to explore a sale. I assumed that I could easily sell the business myself, or use lawyers to negotiate with the prospects that had approached me. However, as I began to reach out to other entrepreneurs who had sold their businesses, I quickly realized the importance of selecting the right investment banker to facilitate a transaction. After researching numerous firms and interviewing four different advisors, I ended up selecting one (Arbor Advisors).
My experience with an advisor was very positive. They developed a target list of prospective buyers, which included those that had already approached me and others that I had not previously considered. They provided a comprehensive checklist that helped me prepare for investor due diligence. While the development of the marketing materials took a significant amount of time, the advisor did most of the heavy lifting and ultimately delivered compelling and persuasive documents that did a great job of highlighting the business.
After the marketing materials were finalized, it was time to go to the market with our offering. This part of the process took longer than I expected. My initial assumption was that potential buyers would respond quickly and express their interest (or lack thereof). However, I soon learned that strategic buyers are typically looking at several other deals and are usually slow to respond to such inquiries. I also found it important to not feel disheartened, since the lack of response was not due to our value proposition, but was directly related to a buyer’s internal workload.
My advice for entrepreneurs is to:
- Determine what goals/objectives you need to meet first before deciding on exploring the sale of your company
- Find the right banker that can help you sell your business by interviewing several firms, verifying their references, and negotiating the right agreement
- Understand the timelines and don’t underestimate the time or effort required
- Seek independent advice on valuation ranges and be flexible
- Be prepared for a fun, bumpy and exhilarating ride