If you are considering selling your business, you may already know that timing your sale right can play a large role in determining the success of your exit. Understanding this, many business owners wonder when is the best time of year to sell their business. The short answer: There is no one “right” time for all businesses. However, understanding how timing can impact your exit can help you choose the time that best fits your unique needs.

In this article, we discuss:

• How timing can impact the success of your exit
• Timing considerations when selling your business
• Personal factors that may impact the timing of your exit

Related Article: 6 Tips for Business Owners On How To Sell a Declining Business

How Timing Can Impact the Success of Your Exit

Many factors impact the overall success of your exit, with the overall strength of your business being the most important. However, when you sell your business does influence the final outcome. While good timing won’t make up for a weak business, it can be the difference between a mediocre sale and a profitable exit.

Good timing can help you achieve:

• More buyer interest and offers
• A higher sale price
• Better deal terms
• An easier selling process

“While good timing won’t make up for a weak business, it can be the difference between a mediocre sale and a profitable exit.”

More buyer interest and offers

As a seller, the more potential buyers you can attract, the more power you have to create a successful exit. More buyer interest leads to more and better offers. This, in turn, puts you in the driver’s seat as you negotiate with interested buyers.

Timing your exit right, including choosing the best time of year to sell, can help you attract more interest and offers. By understanding when your business is at its strongest, you can list it when it is the most attractive to potential buyers.

A higher sale price

More competition from interested buyers ultimately leads to a higher sale price, regardless of your business valuation. As buyers vie for your business, they become motivated to increase their offer to beat out the competition.

Again, while timing your exit right can’t make up for a weak business, it can help to strengthen your position and increase its value. Even small percentage changes in the value of your business can dramatically increase the amount you walk away with. Given that a significant portion of the value you receive from your business comes when you sell it, it pays (literally) to maximize your final sale price however possible.

Better deal terms

A higher sale price is not the only metric you can use to measure the success of a sale. The deal terms you agree to have a significant impact on your post-sale experience. By increasing competition for your business, timing your exit right can help you achieve better deal terms.

Again, while good timing won’t make up for other weaknesses, it can mean the difference between getting the terms you want and accepting subpar offers, all other things being equal.

“The deal terms you agree to have a significant impact on your post-sale experience.”

An easier selling process

Selling a business is almost always a stressful experience. For starters, there is a lot riding on achieving a successful exit. If you are like most entrepreneurs running a successful business, your company likely represents your most valuable asset. Achieving a profitable exit can shape the rest of your life moving forward.

At the same time, there are many hurdles to clear throughout the sale process, from the marketing phase through due diligence and closing, leading to a potentially stressful process. This is compounded by the inevitable unforeseen circumstances that all too often arise during a sale. By timing your exit right and attracting more high-quality offers, you put yourself in the driver’s seat. In doing so, you increase your chances of having an easier selling process.

“Achieving a profitable exit can shape the rest of your life moving forward.”

Timing Considerations when Selling Your Business

So, when is the best time of year to sell a business? Unfortunately, there is no one right answer. There are, however, a combination of factors that can make certain periods more favorable for your particular business. Understanding these factors is key to selecting the right time for you.

Seasonal considerations

To maximize the success of your sale, it is crucial to sell your business when it is doing its best. As a business owner, you are familiar with the fluctuations and patterns of your own business. Depending on the nature of your business, you may see seasonal growth or decline throughout the year.

The most obvious seasonal fluctuation is the yearly holiday season. During late fall, general demand increases for many products as people shop for gifts for their loved ones. If you operate a consumer-focused ecommerce store, for example, October, November, and December are likely to be your biggest months.

On the other hand, if you operate a B2B SaaS company selling a tax product, the holiday season likely won’t be your busiest period. Instead, tax season may see the greatest increase in demand for your product. While not all businesses experience seasonal demand shifts, it is important to note yours when choosing the best time to sell your company.

If possible, plan to sell your business in the lead-up to your busiest season. Buyers will see your business in the best light possible, fueling demand and increasing the likelihood of receiving multiple offers.

“If possible, plan to sell your business in the lead-up to your busiest season.”

Market considerations

It is also important to pay attention to overall market conditions when timing your exit. To repurpose a common phrase, “A rising tide lifts all boats.” Selling your business when market conditions are good makes your business more attractive to potential buyers than when market conditions are poor.

When thinking about market conditions, it is important to consider overall economic conditions as well as the state of your specific industry. Ideally, you should sell when industry and overall economic conditions are good.

Think of it from the perspective of a buyer. Would you prefer to buy a business in a growing industry and good economy, or one in a declining industry? While you may still receive interest in your business regardless of external market conditions, you are likely to attract more potential buyers and higher offers if market conditions are favorable.

Business performance considerations

Lastly, it is important to consider how your business is performing when thinking about timing your exit correctly. Even if you are approaching your high season and the economy is booming, you aren’t likely to attract much interest if your business is performing poorly.

While this may seem obvious, it is worth mentioning. If you can wait to sell your business, wait. Take some time to turn things around and build your business up. While this will require effort, you will reap the rewards when it comes time to sell. No time of year is a good time to sell your business if it is performing poorly.

Personal Factors That Impact the Timing of Your Exit

The right time for you to sell your business has as much to do with your personal situation as external or business considerations. Poor market conditions or off-season timing may be offset by certain personal considerations.

When choosing when to sell your business, it is also important to consider your:

• Personal goals
• Outside opportunities
• Personal financial situation
• Level of interest and burnout

“The right time for you to sell your business has as much to do with your personal situation as external or business considerations.”

Personal goals

First, what are your personal and professional goals? Have you set yourself a timeline to sell your business and move on to other endeavors by a certain date? If so, is that something you might be willing to revisit, or is it a hard deadline?

There are many different goals that could influence your decision to sell. Whether you are seeking to free up time to spend with your loved ones or move into a new line of work, your personal goals hold weight in determining the best time for you to sell.

Outside opportunities

In some cases, you may need to sell your business in order to pursue other opportunities. For example, you may want to start a new business or say “yes” to a proposed venture with a colleague. In order to pursue these opportunities, you may need to free up time by selling your current business.

Often, opportunities in life come at unexpected times and are only available for a brief period. Sometimes, accepting a new opportunity could force you to sell your business regardless of external market conditions or internal business conditions.

Personal financial situation

Your personal financial situation can also shape the timing of your exit. Life circumstances can make it more or less attractive to sell, regardless of whether or not it is the optimal timing from a business standpoint.

For example, you may need to free up a large chunk of cash to pay down debts or make a down payment on a house. In these situations, waiting for optimal conditions to sell may not make sense. While you could possibly achieve a higher sale price by waiting, your personal financial situation may require a different timeline.

Level of interest and burnout

Lastly, you may want to consider your level of interest or motivation in sustaining the business. If you are feeling burned out or managing the business is otherwise negatively impacting you, it may make sense to sell it sooner rather than later. Your health—mental and physical—is worth taking into account when timing your exit.

“By considering all relevant factors, you can choose the timing that best suits your needs.”

Conclusion

When it comes to selling small businesses, there is no one “right” time. The best time of year to sell your business depends on a number of factors, including the seasonal trends of your business, overall market conditions, and the internal strength of your business.

Even then, personal considerations may shape the optimal timing for your specific situation. By considering all relevant factors, you can choose the timing that best suits your needs.