–SINCE 1982–

When is the Right Time to Sell a Business?

As 2022 comes to an end and we look back on the challenging economic turns we’ve had this year, the ability for a business owner to predict trends going forward and to figure out the right time to sell has become even harder. In our conversations with owners, in many cases, the right time is more dependent on each owner’s unique situation versus being at the mercy of unstable economic conditions.  In fact, we find the right time to sell is more driven by the owner’s expectations and ability to understand when they’ve hit a point of diminishing returns both personally and financially.  

The following three are some common questions that every owner should ask themselves.

  1. 1. Have you lost your passion?

    Prior to the pandemic, many owners were reluctant to sell primarily due to how well their business was doing under favorable market conditions.   Often after presenting a realistic valuation range, we’d hear a common response:

    why don’t I just let the business run for 3-5 more years to make the same amount of money and then sell it?

    This response sounds reasonable at first, but many owners do not fully consider other important risk factors in this decision.   A business is built primarily on growing relationships.  If the owner starts to get complacent by just letting the business “run itself,” then this approach can really start to erode the core of the business.   Much like a small water leak that goes unnoticed, it can cause unseen damage to the foundation only to be discovered when it’s too late.   Unfortunately, for a business, this damage often becomes evident when an owner is ready to sell and finds out that key employees are already on their way out or have been planning to start a competing business themselves.   In our experience, if the owner(s) knows they will not be engaged in the business going forward and have lost their passion for growing it, the risk becomes too high to just hold on to it.

  2. 2. How much money is enough?

    The famous John D. Rockefeller’s answer was “just a little bit more.”  I have had owners admit to me privately that greed was driving them a bit more than they would like to admit. Who can blame them? For an owner who has built a highly profitable business over many years, it can often be hard to answer the important question, “how much is really enough?”

    This is where a good financial plan is critical to understand when the business value has hit this threshold.   This amount often changes due to lifestyle decisions and family dynamics so it’s important that the owner re-evaluates this question often.   Our firm frequently works with strategic financial advisors to help owners answer this question and determine the right time to sell.

  3. 3. What will you do after you sell?

    This seems like a simple question but many owners, when asked, do not have an answer. Many successful business owners have not really considered what they will do when they are no longer at the helm of their business. Our firm has worked with owners who have not been able to move forward even with a great offer for the business because they are simply not ready. This can become more of a question of identity and purpose in an owner’s life.

These are hard questions to answer but important in preparing a business to sell.

Our firm is one of the many sponsors of the upcoming workshop on the “The Freedom Point” in Colorado Springs on January 19th – (Click here for more information. This workshop is geared toward business owners who want to look more at how to answer these questions and better prepare for the sale of their business when it’s the right time.  I encourage you to follow the link to sign up or forward this newsletter to a business owner you feel would benefit from it. The majority of our business comes from referrals, and we appreciate your continued trust in our firm.


Robert W. Amerine
President, CBI, M&AMI