Hire an M&A Professional to Sell Your Business

How do I know if my business is ready to sell?

Barbara Taylor
Profile Picture of Barbara Taylor Barbara is the co-founder of Allan Taylor, a boutique M&A firm located in Northwest Arkansas. She began her entrepreneurial journey after moving from Seattle to Northwest Arkansas with her family in 2003. Seeing a need for a decent cup of coffee, she and her husband started the first drive-thru espresso business in the state of Arkansas. They successfully built the business into a popular micro-chain, and eventually sold it to an outside buyer. In her role as a business broker, Barbara combines her first-hand experience as a selling owner with her extensive knowledge of the selling process to help business owners cash out and move on.  Full Bio
Q: I am considering selling my business, but how do I know if it is ready for sale?
A: Well, the short answer to that question is to ask somebody else. When you go to sell your business it’s a good idea to have an outside opinion about whether or not your business is ready to sell. Ideally this should come from somebody who is a deal professional and has a good sense of what it takes to get a business sold. It’s an area where I would not trust your own judgment, no matter how tempting that may seem. Business owners often think their business is entirely sale-ready; ready to go to market, ready to attract interest from buyers and command a bunch of good offers. Then they’re surprised when they find out that’s not the case.

As far as your business being ready to sell, I would first ask the business owner what their goal is for the outcome of a sale. Depending on your answer, the business may or may not be ready. Some business owners want to get the highest price for their business, some business owners just want to get out from under the burden of being a business owner and aren’t as concerned about getting the highest valuation. Some business owners want to find somebody else to be a majority owner so that they can just be an employee.

There are a number of possible outcomes from a sale, and I think you first need to gain clarity on what it is that you’re looking for from selling your business. What’s your goal? The scenarios listed above are all very different. Based on the outcome you’re trying to achieve, you can address whether or not the sale of your business is going to support your ultimate goal for selling it.

If you take the example of an owner wanting the highest price possible, the business is ready to sell when it has the qualities that will make it appealing to a number of buyers, and entice them to make you a good offer for your business. The qualities that your business will need to make it sellable will vary based on its size and industry, but in general the buyer is going to be looking for a history of strong financial performance that’s consistent year over year, preferably with all key performance indicators moving upwards. Selling in a down year is usually a bad idea. It’s almost guaranteed to lower your valuation.

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