This question sometimes plays through the mind of every SME entrepreneur. How to answer this question is not straightforward.
Of course, a good time to sell a business is at the start of an upward trend because it shows potential in growth. However, it is often the personal wishes and circumstances of an entrepreneur that guide this. Such as the desire, after having experienced two crises, to take some of the company's assets out of the risk sphere, to make time for other things, age, etc. As an entrepreneur, you want to sell your business when you are ready. The good news is that you can often create this moment yourself.
Strategy
Selling the business is an important decision and a complex process. Therefore, proper preparation is essential. It is up to the entrepreneur to make the business as "sale-ready" as possible. In this way, the entrepreneur creates his or her own ideal moment.
Combined with an outlined (pre-exit) strategy and a corresponding plan, the entrepreneur largely takes control of when to sell a business. Moreover, this increases the likelihood that the business will be sold based on personal desires, motives and goals.
Timing
However, the current covid pandemic shows that despite good preparation, unforeseen circumstances can also have a very big impact on the ideal time to sell a business.
The 62-year-old salesperson at a large event venue is still happy to have handed over the keys to a major strategic party in March 2020. While the 55-year-old entrepreneur who operated as a supplier in the medical industry is still scratching his head. Knowing that in the two years since selling his business in early February 2020, his company's revenue and profits nearly doubled.
Seller's Market
Right now, all the lights are still on green in the SME takeover market. In fact, it is a seller's market. The Dutch economy is doing well, many businesses are presenting excellent figures, the number of buyers is increasing and there is sufficient appetite among wealthy strategic and financial parties to invest.
Our advice to entrepreneurs who are considering a business sale is always to start it in time. An adviser is preferably involved in a sale process at an early stage (up to a year before the sale). Often the process starts with a financial analysis. In this way it can be determined what the expected sales proceeds will be.
Should the outcome of that analysis not fall into the desired range, then the various buttons can still be turned together at that moment. Think of working capital optimization, improving margins, reducing dependence on the DGA, concluding multi-year contracts with customers, etc.
This is how the entrepreneur can ultimately, based on personal wants and needs, get as close as possible to the ideal sales moment.
