When is the right time to exit?

By Pete Sokoloff
Security Systems News

The number one question I get asked in speaking with company owners is, "When is the right time to sell my business?"

There is a great deal of emotion that goes into selling a business. In terms of stress, it has been rated right up there with divorce and the death of a loved one. Though there are numerous logical reasons to sell or not sell a business, at the end of the day all decisions about making an exit are most heavily influenced by the emotions of the owners. This commentary will discuss not only the elements that should be considered, but what constitutes the right and the wrong mindset.

The logic of the right time to sell any company is indisputable. It is when multiple buyers are interested and the highest price can be commanded. This "perfect storm" occurs when the following elements are in place: 1. There is a history of financial improvement in your business over the last few years, both in revenues and earnings. 2. There is strong evidence that revenues and earnings will continue to increase in future years. 3. Market conditions are such that the investment community believes there is good upside ahead for the industry segment your company serves.

When these conditions are met, the owners of the business are in the enviable position of being able to find many interested buyers and a premium price for their company. So, why would a potential seller disregard this logic?

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