The Importance of Timing: When to Sell Your Business for Maximum Value

Selling your business is a major decision, and once you’re ready to take the plunge, it can be tempting to dive into a deal as fast as possible. But timing is everything in M&A. Maximizing your business’ value has as much to do with when you sell as it does your corporate fundamentals. The Symmetrical team works with business owners to strike when the timing is right — and to achieve the best deal for our clients. Here are a few things we look for when considering the best timing for a transaction.

Understanding Economic Cycles

Markets are frequently fluctuating, and as you would expect, better deals come in times of economic growth. In growth cycles, companies are buoyed by rising valuations and often compete to expand and shore up market share. Their access to capital improves, enabling them to explore deals. These are great times to be a seller.

The challenge is that it’s difficult to know how long these times will last — and they also vary by sector. One sector of the economy might be poised for growth while another is preparing for turbulent times and cutting costs. As a seller, it’s important to keep an eye on micro and macroeconomic trends simultaneously. The sellers that have success in M&A are the ones that are predictive rather than reactive — so that when companies are able to expand, you’re ready to seize the opportunity.

Choosing a Moment of Peak Value

Just as it’s important to think about when a buyer’s economic fortunes are at their best, it’s also critical to begin a sale of your business only when your own business is at peak value. But how can you identify peak value?

It starts with economic performance. A time of declining revenue typically isn’t the moment to explore a sale. However, while your business’ past performance and present fundamentals will help attract suitors, what will ultimately close a deal is convincing a buyer that your firm’s future performance holds even more promise. In other words, achieving your business’ peak value is largely about framing how your business will enable a buyer to thrive in new ways. Not only will this separate your firm from other potential targets, but it will also help you achieve the best deal.

Weighing the Regulatory Environment

As a seller, it’s important to understand the buyer’s regulatory environment. Regulation and government legislation can have a major impact on economic performance, and as a seller, you should be aware of these factors when exploring a sale. Just like with economic cycles, think about the future here more than the present. Under the incoming Republican administration, for example, we would expect a favorable M&A regulatory environment over the next few years.

Achieving the Right Timing for Both Sides

Ultimately, an M&A deal can only reach peak value when the timing is right for both sides: the buyer and the seller. By thinking proactively and analyzing market and regulatory trends, it’s possible to have a better sense of when buyers will be looking to make a deal.

Our team can help you analyze the market so that when the moment is right for you and a buyer, you’re prepared to make a deal and maximize the value you’ve worked so hard to build. Get in touch with us today to learn more about how we can help set the stage for success.