While it can be easier to proceed with the status quo and not to worry about valuation or sellability, the best time to seek alternatives to selling your business is well before you actually intend to sell. Even if you have no timeline, we advise that you think about the ultimate outcome as if it could happen, so that you are prepared if and when it does.
Thinking about your options now gives you a major element of control over timing, and helps you get the most possible out of the sale or transfer when it ultimately takes place. Here are some specific triggers for considering the alternatives:
You’re Uncertain About the Value
If you get an inquiry or offer to sell your business before you’re ready to sell, how will you know whether or not it’s a good offer? If you don’t know what your business is objectively worth to external entities, you may be vulnerable to external forces. Uncertainty also means you may be leaving value on the table. Once you know the current valuation, you have the foundation upon which to build, and effective alternatives to selling your business.
It’s Worth More to You Than the Value of the Offer
How do you protect the investments you and others have made in your business if you find you must sell before you’re really ready? Don’t rely upon the value YOU place on your business. Sellability relies upon the value others place on it. When you own a business, you stake your current and future security on the income it generates. If the objective valuation is less than the value you expect, it’s time to take stock, consider the alternatives to selling your business, and work towards increasing the objective value before a transition is required.
The Future Value May Be Higher than Current Value
Similarly, you may be working on aspects of your business and have a solid exit plan. You may know the current value and have great confidence in its growth and future value. This is a great time to think carefully about the alternatives to selling your business, allowing you to maximize the value you get out of it when it’s time to sell or transfer.