There are numerous factors that affect the best time to sell a business. Let’s consider some of these factors. Firstly, buyers are likely to prefer a business that has a recent history of year-on-year growth in both sales and profitability. If you are able to work on your business to achieve a number of years of ongoing growth, not only are you likely to get more buyers interested in the business, this growth is also likely to boost the sale price achieved.

Another important consideration is the spread of customers. If your business is reliant on one or two customers for a high proportion of sales, this is likely to lower buyer interest and the ultimate selling price. If this is the case, delaying the sale of the business to work on growing the number of customers and reducing the reliance on the largest customers could potentially be a good strategy.

For certain businesses, such as retail businesses that are highly location dependent, buyers will want a long, secure lease. If you put the business on the market just before the lease is about to expire, this could create a few issues for buyers. Firstly, the level of buyer interest is likely to be reduced. Secondly, some banks may be reluctant to lend money to buyers who don’t have a secure long-term lease. Thirdly, landlords may require a new fit out at the end/start of the lease. This would increase the buyers’ costs significantly and could lead them to put in very low offers. That said, it is important to consider your own circumstances before entering into a new lease. If the business has low profitability or is unprofitable, you may prefer not to lock yourself into a new long lease. Also, if you need to exit the business by a certain date, entering into a long-term lease may not be the right approach.

Industrial businesses often have the potential to merge with other businesses. If the buyer is another business that wants to relocate the operation into their own premises, they may not want to be tied into a long lease. For these businesses, sometimes the best time to sell can be near the end of the lease, if the landlord is keen to sign a new long-term lease. In this way, buyers will have the choice between signing a new, secure, long lease or relocating out of the existing premises.

It is also important to consider the state of the market, economy and political climate when deciding when to sell. The more stable or positive the economy and political environment are, the more likely buyers are to have the confidence to buy a business. However, when there is a high level of unemployment, the demand for smaller ‘buy yourself a job’ type businesses often increases. With higher levels of buyer confidence and activity, businesses tend to sell more quickly and for higher prices.

There are also personal circumstances to consider when determining the ideal time to sell your business. For example, if you need more money than the likely proceeds from the sale, you may want to delay the sale and work in the business a bit longer to earn more profit and salary out of the business. The ideal time for you to sell may also be the date that you plan to retire.

Of course, life being what it is, there are times when personal circumstances may force you to sell at short notice. If this happens, please feel free to see our tips for short term planning for a business sale: