When should you sell a company? Finding the optimal time

Factors that can influence the timing of the sale

In many cases, the idea of selling one’s own company is put off for the time being. After all, a sale is often accompanied by a separation from one’s own life’s work. Our advice right at the start: think about it early on.

As an entrepreneur, you will have put a lot of energy and passion into your company, so the sale – and the optimal time for it – should be well thought out. The right moment to sell your company depends on several framework conditions – both on a business and personal level. Here are some factors that can influence the timing of a sale and situations in which selling may be advisable:

Profitability:

If your company is currently performing above average, generating stable earnings, and there is strong demand in the market, this may be the ideal moment to achieve an attractive sale price.

Market cycles:

During economic booms or periods of growth within your industry, buyers are often willing to pay higher prices. A favorable market environment can therefore significantly increase the value of your company.

Personal factors:

Whether it’s retirement, health changes, family developments, or simply the desire for a new phase in life—personal factors play a central role in the decision to sell the company.

Strategic acquisitions:

If a competitor or a company in a related industry shows interest in your company because of synergies or growth potential, it is advisable to seriously consider this option.

Economic uncertainty

An impending downturn can also be a selling point. Those who act early, before negative conditions affect sales, profits, or valuations, may be able to secure better terms.

Succession planning

If there is no suitable successor within the family or the company, it makes sense to actively seek an external buyer. Finding a solution in good time prevents uncertainty later on —among customers, partners, and employees.

When should you sell your business? Signs of the right time

In addition to traditional business management considerations and external factors, there are also personal or strategic warning signs that now could be the right time to sell the company:

• Declining motivation: If you lack enthusiasm for day-to-day business or find yourself increasingly distancing yourself from the company, this can be a clear warning sign. Those who withdraw emotionally often invest less energy—which in turn has a long-term impact on the development and valuation of the company.
• Overwork or stress: Health reasons, family changes, or feelings of being overwhelmed should not be ignored. Especially when you realize that you have reached your personal limit, a well-planned sale of the company can be a sensible solution.
• No succession plan in sight: Is there no one in the family or the company who can or wants to take over the business? Then it is important to consider alternatives at an early stage – because an orderly handover increases the value of the company and ensures its continued existence.
• Changing market or increasing competitive pressure: If you recognize that your industry is in a state of upheaval or that competitors are investing heavily while your own growth is stagnating, a sale may make more sense at this point than fighting against the trend.
• Foreseeable economic risks: Negative developments such as a recession, rising interest rates, or political uncertainties can also be reasons to sell early—especially if your company is currently still in good shape.

Anyone who recognizes these signals should not hesitate to address the issue of selling the company. We will be happy to support you.

The influence of age on the time of sale

The timing of a company sale is often automatically associated with retirement age – but age is only one aspect among many. A strategically planned sale can also make sense in your mid-40s or early 50s – especially if other goals come to the fore or a particularly attractive market environment presents itself.

Tips for planning the sale of a company

A successful company sale begins long before the actual transaction. Strategic planning, preparation and professional support at an early stage lay the foundations for a smooth process and an optimal selling price.

• Start on time – Ideally 1 to 2 years before the target sales date.
• Have a company valuation carried out in order to obtain a realistic price estimate.
• Carefully document all relevant key figures, contracts and processes – keyword: due diligence by the buyer.
• Strengthen your company structure, e.g. through delegation of responsibility, transparent organization and customer loyalty.
• Rely on professional support to avoid typical mistakes and target suitable buyers.

Conclusion: When should you sell a company?

The sale of a company requires careful planning, taking various factors into account in order to determine the optimal time to sell. Early preparation is advisable and helpful, as the sales process often takes several months. If you wait too long, this can result in poorer sales conditions, making it increasingly difficult to find potential buyers or to achieve an attractive sales price. Take advantage of the dynamics of your market and the strengths of your company to actively shape the timing of your sales – don’t wait until external circumstances force you to do so.

Do you need help determining the right time to sell?

Are you facing the challenge of selling your company and do not know exactly how to approach this project? We would be happy to assist you. We have been active in the field of M&A advisory for over 20 years and can therefore support you with the necessary experience, know-how and a broad network of experts. Make an appointment for a first personal meeting, we are looking forward to hearing from you.