Right Now is a Bad Time to Sell Your Business

Right Now is a Bad Time to Sell Your Business

It’s time.   I’m going to do it.  Right now.

No more waiting, no more 18-hour days, no more employee headaches.

I’ve decided.   I’m going to put my business up for sale.

Congratulations, you’ve just made the most expensive decision you’ll ever make, because "right now" is a bad time to sell your business.

At least it was for John.

John had a decent, sell-able business.  But over the years he had collected obsolete inventory – only John didn’t believe it was obsolete.  He thought his inventory was worth $500,000, but everyone else thought there was $200,000 of sell-able inventory.

That didn’t matter to John.  He wanted to sell the business, and he wanted to sell it right now.   No waiting.  No more putting it off.  He wanted to sell it immediately, but only with a value on the inventory of $500,000.

I encouraged John to wait on the attempted sale.  Instead I thought he should take the next 12 months and prove whether he was right or wrong about the value of the old inventory by trying to sell it himself.

  • If he was right:   He’d sell the inventory at the value he believed it was worth.  That would increase his profitability, which would make the business more attractive for a sale.  He’d also purge what was clearly bloated inventory and make the warehouse look much better.  A win/win/win.
  • If he was wrong:  He would find out the easy way, and he wouldn’t kill his chance to sell his business.  He’d made some inventory mistakes over the years, and maybe this process would allow him to come to terms with that without a heavy consequence.

John, like many owners, thought his business was worth more than it was.  That's not unusual, and easing into the sale could have helped him learn that.  John disagreed.  He wanted to sell the whole thing, right away.  He found a broker to take the listing and put the business on the market.  The broker brought multiple potential buyers, all who quickly realized the business valuation was bloated.  Finally, John took the business off the market in disgust because “none of these brokers know how to sell anything”.

John had an issue with excess inventory, but that was a problem that could have been addressed.  John's real issue was believing that a business should be sell-able "right-now" just because the owner decides to sell.   The immediately sell-able business is rare.  Most require changes to be ready, and sometimes those changes can take months or years to complete.  "Right now", almost never works -- although it's probably the most common phrase to come after "I want to sell . . .".

Trying to sell an unprepared business is a fabulous way to kill a sale, or to destroy a massive amount of value.   What's the best time to sell your business?  When the business is ready, and when the owner is prepared to be a seller, and not just a business owner who wants to sell.

If you want to sell your business, “right now” is absolutely the right time to get your business ready for sale.  This will likely be the biggest financial transaction in your life, doesn't it make sense to do it right?

 

Mike Finger

Leave a Reply

Your email address will not be published. Required fields are marked *

Our FREE Newsletter Will Help You

Learn to Leave !