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When is The Best Time to Sell Your Business?

If you’re a franchise owner, this is a great time to consider selling your business. Economic conditions are right and the cost of borrowing money is still low so that means buyers are plentiful. However, is the time right for you personally? The answer depends on several factors.

Here’s what you need to think about.

There’s a saying among business brokers: “The ideal time to sell is when there is still ‘meat on the bone.’ This means that the company’s best days are ahead. Buyers are looking for businesses with an upside and unrealized opportunities. This is what gets them excited.

Of course, the real value is based on profitability. However, perceived value is important too. It’s easier to sell a business that shows positive movement. Is the business thriving and growing? Or has it started to decline? Perceived value can also include the location, the customer base, and industry trends. A buyer is looking both at current value and future potential.

The challenge for the existing business owner is to understand where they are in their lifecycle. Sell too early and you leave money on the table. Try to sell too late and you may not find anyone willing to be the captain of your sinking ship.

What would you rather buy? A company with revenues and profits trending upward? Or a company showing consistent years of decline. Sellers should list their company while they are in the “optimal zone.”

The ideal time to sell is when the business has not yet reached its peak. The owner has extracted as much value as possible and there is still enough money to be made for the next owner. Of course, we know it's going to take hard work, ambition, and perhaps a capital infusion to reach this next level.

Buyers are on the lookout for a business that has passed the startup stage and has proven its ability to succeed. They’ll be paying attention to the direction of sales, cash flow, and your customer base: is it expanding or contracting?

That’s why we advise business owners to present more than a current snapshot of their business’s success; we help them map progress over the past few years so potential buyers can see where the business is in its natural lifespan. Savvy buyers will also look beyond the top-line numbers for signs of growth or decline. It might be possible, for example, for revenues to be stable but for profitability to be dropping due to the cost of materials or labor.

The challenge with this model? Some owners don’t decide to sell when there’s still enough “meat on the bone.” Many wait until the business is mature. They’ve seen it through its hectic startup phase and enjoyed building on their early success. At some point, the business starts humming along smoothly on its own. Over time, the owner becomes less hungry, the excitement diminishes, or the local market peaks. Whatever the reason, the owner starts looking around for a buyer to take over. But that’s not the right time to sell.

We also see owners who wait until the business is in decline. It’s understandable; sales are flat or declining, cash is tight, so there’s less money to invest in marketing. It’s become a slog that’s no longer fun. No buyer wants to take on a business that’s on its way down. Any buyer who is willing will expect to buy it at a deep discount.

We’re encouraged by the interest and the activity we’re seeing among potential buyers this year. We’re telling all our potential sellers the same thing: the right time to sell your business is a moving target, but it’s much better when the target is moving up.


About Franchise Clearly®
Franchise Clearly® specializes in reselling franchise businesses. Working with owners, they work through a defined proprietary process that finds highly qualified buyers and guides them quickly to the closing table. Their innovative team approach makes for a seamless process that nets the highest offer and the best terms possible for the seller.

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