The mantra of ‘buy low and sell high’ should be taken to heart by every business owner when it comes to selling their business. The best time to sell your business is when you do not have to sell, but simply because you have decided that selling your business is the best option at the present time.
Understanding Why You Want to Sell Your Business
Sometimes business owners have to sell their business due to various external events. These include divorce, having to move, personal issues, or health issues.
Forced Sales are Not the Best Time to Sell Your Business
Such ‘forced sales’ often results in the business owner not receiving as high a price than they ordinarily would have received under normal circumstances. Typically the business is underperforming because of these external pressures on the owner. Also the seller will not have the luxury of time..they need to sell now! This of course will result in the buyer having more leverage during negotiations, which will result in a lower purchase price.
Favorable Business and Personal Environment Are Good Times to Sell Your Business
- It is always best to sell during a time of ‘normalcy’ for the business and for the business owner.
- Sell when the economy is strong.
- Sell when your personal life is as stable as possible.
- Sell when you think the business is doing great.
- This will give you as the seller far more leverage when dealing with various buyers because you do not HAVE to sell..you only WANT to sell.
Timing of the Sale and Tax Consequences of Selling Your Business
When thinking about retirement, it is always best to give yourself at least a year to sell the business. This will enable you to have the luxury of time and not have ‘one foot out the door’ while waiting to sell. Remember that tax laws should be closely scrutinized and will change, which will affect your after after tax proceeds of the sale.
Focus on Running Your Business During the Sales Process
You as the business owner should always be focused on running your business. Do not get distracted or make unsound business decisions while the business is on the market. This will only ultimately result in a lower purchase price. Let a professional business broker guide you through the process.
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