Deciding when to sell your business involves assessing personal readiness, current market conditions, and technological advancements. Joe Moran, Managing Partner at Marktlink, guides us through the complex process of maximizing business value.
After countless hours of blood, sweat, and tears making your business the success that it is today, handing over the reins to someone else can be an incredibly difficult decision. When selling your business has the potential to change the trajectory of your financial future, personal life, and career, this is only natural.
With that said, timing is the most important ingredient when determining the right moment to sell your business. It’s a balancing act between personal, geopolitical, and economic indicators – each of which can affect the pool of potential buyers, your ability to receive the best possible sale price, and the ease of the transaction.
As Marktlink has over 25 years of experience guiding entrepreneurs to navigate these challenges, below, I’ll highlight some of the leading incentives to sell your business in the current economy and how to best prepare your business for sale.
Assess your personal readiness
One of the first considerations should be your personal readiness to sell. This includes whether you’re ready for a new challenge, whether the sale aligns with your personal financial objectives – such as gaining a lump sum for retirement or another investment – or if you’re ready for a lifestyle change.
Evaluate current market conditions
If you’re ready to sell from a personal standpoint, you must then assess whether the current market conditions will generate your intended sale price and terms.
Over the last couple of years, fluctuating inflation and interest rates have caused hesitancy amongst potential buyers and sellers looking to engage in mergers and acquisitions. As high interest rates can make it more expensive for companies to finance deals and cause lower valuations for those looking to sell their business, this has encouraged both parties to wait for more favourable market conditions.
Now, the tide is changing. Inflation has fallen to its lowest level in three years and economists anticipate interest rates will hit 3.5% by the end of 2025. Takeover interest in UK companies has reached its highest level in six years, and positive sentiment for an uptick in M&A activity has only increased since the confirmation of a general election in July.
Consider appetite for technological advancement
It’s no secret that technology is transforming operations across every industry, particularly within the finance, manufacturing, logistics, and healthcare sectors that are increasingly embedding AI into processes.
This advancement means now could be a good time to sell for two reasons – the first being the unique position created for technology businesses due to increased demand. As a growing number of industries seek to expand their service and product offering with technology, those providing the means to achieve this can capitalise on a wider pool of potential buyers and increased sale prices.
The second reason relates to the vast competitive acceleration caused by businesses that have already integrated technology on a mass scale. As businesses that aren’t yet able to follow suit must find new ways to compete, a growing number of companies will likely utilise M&A for diversification purposes. Those that seek to minimise risk by entering new territories, widening their customer base, and gaining access to skilled talent will provide entrepreneurs with greater opportunities to receive an attractive sale price and appealing terms.
Preparing for sale
There is no clear-cut way to determine the right time to sell your business, but the simplest way to ensure you’re ready to take advantage of appealing offers is to start early.
Preparing for sale is a long and complex process that requires the expertise of an experienced M&A advisor. As your business’ financial health is a major determinant in the sale process and will be scrutinised by potential buyers, advisors can play a key role in ensuring your financial records are up to date, ensuring factors such as revenue and profitability, cash flow, and growth potential are highlighted.
Gaining insight into the value of your business is also critical to rectify any outstanding actions that will boost its appeal to potential buyers. As a first step, our free Marktlink Multiple and exit-readiness test provide you with an initial understanding of value, strengths, and potential areas for improvement.
From here, Marktlink’s expert M&A advisors guide entrepreneurs through the sales process with a tailored exit strategy that maximises your business value and supports your personal and professional outlook for the future.
Whether you’re ready to sell now, want to step back from your business in stages, or you’re simply curious about where to begin, visit Marktlink to speak with one of our specialist advisors.
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