Deciding when to sell your business is one of the most challenging decisions you’ll ever face. It’s a deeply personal choice, often fraught with emotions and financial implications. One practical way to gauge the right time to sell is to recognize when someone else is willing to invest more in your business than you are.
When you first start your business, no one is more invested in its success than you. You’ve likely clocked countless hours and poured a significant portion of your savings into getting it off the ground. In those early days, you’re willing to take big risks because, quite frankly, there’s not much to lose. As Bob Dylan famously said, “When you ain’t got nothing, you got nothing to lose.”
But as your business grows and becomes more valuable, your willingness to take those same risks diminishes. You’ve built up equity, and the stakes are much higher. At this point, you might find that someone else is more willing to take risks and invest time and money into your business.
The Peach New Media Story
Consider the example of David Will, the founder of Peach New Media. David started the company in 2000 as a web conferencing reseller. He pivoted multiple times, eventually finding success with learning management software for associations. By 2015, Peach New Media had 40 employees and received a lucrative acquisition offer from a large private equity firm.
David faced a dilemma. He loved his business and the team he had built, but the offer was life-changing. He realized that as his business had grown, his appetite for risk had decreased. The potential buyer was willing to make a big bet on integrating Peach New Media into their portfolio, a risk David was no longer comfortable taking. So, he decided to sell.
When to Sell
The point at which a buyer is willing to risk more than you are happens at different stages for everyone. For instance, if you have a business worth $1 million, you might be willing to risk it all for a chance to grow it to $10 million. But if your business is worth $10 million, risking it all for $100 million becomes a much tougher decision.
And if your business is worth $100 million, the thought of risking it all for a shot at becoming a billion-dollar company seems almost unthinkable. Yet, a CEO of a billion-dollar corporation with ambitious growth goals might see that $100 million as a risk worth taking.
When you reach a point where someone else is more willing to invest in your business than you are, it might be time to consider selling. Recognizing this moment can be incredibly powerful. It’s not about giving up; it’s about acknowledging the different phases of business ownership and understanding when your role in your company’s journey has fulfilled its purpose.
Selling your business doesn’t mean the end of your entrepreneurial spirit. It means passing the torch to someone who sees potential where you might see risk. It means ensuring your business continues to grow and thrive, even if it’s not under your stewardship.
Evaluating Your Business to Find the Right Buyers
Understanding the right time to sell is only part of the equation. Finding the right buyer who aligns with your vision for the future of your business is equally crucial. Evaluating your business’s strengths, potential for growth, and market position can help you attract the right buyers.
To dive deeper into how to evaluate your business and find the right buyers, watch the full episode of Succession Stories: Evaluating Your Business to Find the Right Buyers with Tim Tannert. In this episode, Tim Tannert shares invaluable insights on making your business attractive to potential acquirers and ensuring a successful transition.
Selling your business is not just a transaction; it’s a transition. It’s about handing over your legacy to someone who will cherish and grow it further. So, when you find that someone is more willing to invest in your business than you are, embrace the opportunity. It might just be the right time to sell.
Curious about what your business transition will look like?
DM Laurie Barkman, The Business Transition Sherpa, with any questions. Schedule a call today at TheBusinessTransitionSherpa.com.
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