Knowing When To Sell Your Business

Tuesday, 3 April 2007, 10:08 am
Opinion: nzbizbuysell.co.nz

Knowing When To Sell Your Business

New Zealand produces its fair share of entrepreneurs and with it, a proliferation of businesses. Many of these businesses are owned by our "soon to be retiring" baby boomers, so how do you know when is the right time to sell your business to get the best from your investment?

Whatever stage you are at of business ownership, it is important to have an exit plan in place. The exit plan should encompass all scenarios, not just your preferred option. Sometimes you may have no choice in the question of timing as unexpected eventualities like divorce, ill-health or dissolution of a partnership impact on your ability to continue with business. Of course in the event of the dissolution of a partnership you will be left with only two options being; one partner buying out the other, or selling the business to a third party and dividing the net profits.

It pays to consider various scenarios ahead of time and keep a close eye on the market so that when the right opportunity arises you will be prepared. Unforeseen eventualities aside, you will be left with the question of when is it in your best interests to sell your business?

Some may intend to continue with their business until retirement age but situations and circumstances can change so watch the market and identify any emerging trends that may impact on your business and on the timing of your sale so that you get to maximize the return on your investment.

The key to any successful business is an enthusiastic operator and if your passion goes then it may be time to place your business for sale. Keep in mind that deciding to sell a business you have founded, nurtured and grown can be agonising but it can also be liberating.

Growing companies are more attractive to buyers than static ones and a demonstrated track record of growth will ensure your business sells well.
Know your industry as when it is enjoying an upsurge there will be no shortage of buyers willing to pay a premium to get in on the action. This is especially important if you consider your product has a limited lifespan. Wait too long and you will have missed the moment.

Low interest rates make it more attractive for entrepreneurs to buy a business as repayments are lower, and buyers may qualify for a larger loans, which translates to being able to pay more for your business.

As a business owner you should regularly monitor the market, the health of your business, ensuring it maintains it's attractiveness to prospective buyers so you get your best price when you decide to sell. For more tips on selling your business, visit www.nzbizbuysell.co.nz

ENDS

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