When is the best time of year to sell a business?
There are plenty of articles answering the question: how long does it take to sell a business? The typical response is that it takes about 8 to 12 months to appropriately prepare, plan and execute the sale of a mid-market business. There are also lots of articles that cover "when is the right time to sell a business?" The standard answer for this question is purchase price can be maximized when all personal, business and industry factors align. So assuming that a business is ready to sell, let’s take it one step further and analyze the best time of year to sell a business.
I breakdown the sale of the business into four distinct phases; preparation, marketing, buyer selection and closing. Each phase takes approximately three months to complete. Knowing these timelines, we can work backward to figure out the optimal timing for each phase.
From my experience, it is best to start the marketing phase in September because that is when deal-makers are back from summer holidays, refreshed and ready to find new opportunities. Also, you don’t want to be entering the closing phase over the summer months because vacations for key members of your M&A team can delay the sale process. Of course, the other consideration to account for is holiday celebrations in the month December. If you can time the buyer selection phase over these months, the seller will have an opportunity to reflect on the process and alternatives that have been presented during the marketing phase.
So, in my opinion, June is the best month to engage an investment banker to start the year-long process of selling a business. Here is a graphical representation of the activities and best timing for each phase of a sale process:
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