Deciding when to sell your business can be complex and deeply personal, but it is a decision many entrepreneurs in Kanata and the Ottawa region are making. The list of recent and rumoured mergers and acquisitions is a long one, with deals involving LiveWell Foods Canada, MarComm Systems Group, True North Avionics and several other local tech companies.
Many entrepreneurs and business owners are so passionate about their business, even when it’s struggling, that they wait until money is tight and sell under less than ideal circumstances. Even successful business owners fall victim to hesitation when they can’t quite make the leap to sell. Other business owners fail to adequately prepare and, as a result, their business is undervalued, sometimes significantly. Medical professionals face unique challenges in selling their practice, and require expert guidance to ensure optimal return.
It takes significant planning and preparation to ensure that your business is properly valued by potential buyers and can be successfully sold. Qualified guidance and hard work are required to complete all of the preparations needed, such as producing two years of profitable tax returns with few write-offs. Whether you’re a doctor, a pharmacist, an entrepreneur or a franchisee, there is a lot to consider.
Depending on your industry, it can be difficult to predict the local business climate months or years in advance. So how do you know if it’s the right time to sell?
1. You are mentally ready
Being a business owner can be exhausting work, and many reach a point where they simply no longer enjoy running their business. This can happen for a variety of personal or professional reasons, and even for positive ones – such as a business growing and exceeding the entrepreneur’s expectations, or requiring them to focus most of their time on back-office functions.
If you are starting to feel consistently overwhelmed or too far removed from your reasons for getting into business, it may time to seek qualified support and start planning for a sale. Take that financial gain and put it towards a new venture or your retirement (we can talk about what’s best for you).
2. Your business is ready
Many entrepreneurs wait until their business is struggling before considering a sale, but it is best to sell when your business is on the up-swing. Experienced entrepeneurs often get their business professionally valuated every year as a matter of routine, just to identify when they are doing well and can sell for the best price.
3. Your market is changing
Even if your business is profitable, you may find yourself running out of innovative ideas. This happens to everyone sometimes, but if you have settled into a reactionary routine and no longer generate the ideas that advance your market, the time may be right to sell.
Your market may also change as a result of advancing technology, especially automation. If you do not have the capital to modernize your business, its brand recognition and market share may prove exceptionally valuable to a buyer who does.
4. You need to sell
It is always best to sell while you are ahead, but there is no use throwing good money after bad. Although selling under pressure is ill-advised, sometimes it’s the best choice for your financial security.
If your business is facing a downturn in the market, or you have run out of money to invest, selling is still an option. You will need professional support to value and market your business as effectively as possible, but it is possible.
Whatever your circumstances or reasons for considering a merger, acquisition or sale, you are welcome to contact me if you have any questions.