When To Sell A CompanyIn general, the best time to sell a company is when it is doing well, and/or positioned to achieve growth. This point is when owners can reap the greatest rewards for their hard work building the company. Proper Exit Planning Considers Business and Personal Needs
As illustrated below, there are a number of important business and personal
factors to consider,
though there is no one consideration that trumps all others. Strategic Issues  In addition to the "when" question, company owners often struggle with many common questions about exiting their company. What's the business really worth? Should we sell now, or wait a few more years? - Should we focus on building value for a future sale or continue to operate as we are?
- Is there a way to retain some involvement with the company?
- What kind of buyer would be most interested in our company?
Does it make sense to merge instead of selling out completely? How do we get buyers to recognize the value of potential growth opportunities for the company?
Helping owners sort out these critical questions confidentially is fundamental to our business. We help owners explore options and make informed decisions. And when the decision is made to sell, each phase of a business sale employs a rigorous, process-driven approach. Personal IssuesIn addition to the typical business questions above, typical personal questions may include: - What will I do with myself after selling?
- Will I get enough money to meet my financial objectives?
- How should I manage my high dependence "and that of my family" upon the stock of only one company - my own?
- What will my tax obligations be when selling?
What should I do with the money I make upon selling? How much will we have to live on, and how much will we have left for our families?
Not only may proper planning inform the question of when to sell, it may significantly affect owners' future wealth. Traps To Avoid Unfortunately, owners of mature companies often harvest the profits when the company is doing well, then they become interested in selling when sales growth slows.
Burnout and lack of enthusiasm for the
business can set up a downward spiral: lack of interest results in
slowing sales, leading to cash flow difficulties, which only further
reduces enthusiasm and discourages an aggressive turnaround effort. Owners of emerging growth companies may not adequately plan their needs for growth capital or management talent, then find themselves in desperate need of either or both.
Either situation is deleterious to owners' wealth, because the value of the company and its attractiveness to buyers declines along with its performance. Instead of building funds for retirement, buying or starting another business, etc., owners wind up rapidly depleting their potential gains. Our ApproachThrough Tranzequity internal resources and alliance partners, we can offer company owners deep resources to guide the planning process. We encourage company owners to allow us to form a team with the company's accounting, legal and other advisors early in the process of positioning for sale. If company owners do not have relationships with advisors such as those shown in the graphic above, or if the advisors are not experienced in dealing with the sale of privately-held companies, we can refer highly credentialed, experienced resources. We do not give tax or legal advice. However, we understand the process of transferring company ownership, and may be able to make suggestions that significantly enhance the proceeds a seller obtains from the sale. We recommend that owners retain proper counsel early in the process to augment and/or confirm our positions. TimingWaiting until all the stars are perfectly aligned is impractical. Waiting until something happens to the business or the owners' personal circumstance is not only unwise but may reduce the funds available after the sale for retirement, reinvestment, leaving an inheritance, ability to fund future entrepreneurial endeavors, etc. Please consider the graphic below, as well as Current Market Conditions for Selling. Owners who plan their exit in a pro-active, systematic manner have the greatest opportunity to live the future life they desire, whereas owners who do not may find themselves with fewer options and less money to fund that future life.
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For Sellers 
