When is the Best Time to Sell Your Company
Transcribed article from the video above.
Ideally the best time to sell your company is when you feel great about selling it, however entrepenuers rarely feel great about selling their company unless it’s an astronomical offer. The fact is, most enterpenuers, if they get one offer, it may be the one and only offer they ever get. A lot of this comes down to, will there be another offer to even look at, is this your one shot of selling all together. Most companies, when they start getting offers are at the hight of their hotness, their at the height of their careers, where their company is the most coveted piece of technology or product in the market.
What they tend to not realize is in the future they may not be and that could be in as soon as six months, the market itself could cool down, you could have an event in the market place like we did in 2007 or 2001, where all of the sudden the whole market itself implodes and no one can buy anything, companies or otherwise. So the first question has to be, will this opportunity present itself again? If it won’t , you have an even bigger isuue, this is your one shot to get out. Even if the offer is on the table, if it’s only one offer, if you don’t have another offer to compare it to, you really don’t know if it’s a fair price.
Also if there is only one offer on the table, it gives you a little bit on an indication that this may be one of the last offers that you get. Until you have multiple offers, you can’t validate the price or the demand. You really have to ask yourself, “Will this happen again?”
You also need to look at the amount and see how it reflects on you personally. Meaning, most people, even with a relatively small out come, meaning they take home a couple hundred thousand dollars, that’s a life changing amount of money. It doesn’t have to be a billion dollar exit. Even a few hundred thousand dollars can change most people’s lives in dramatic ways, it pays off their car, helps them put a down payment on their house, things they spend most of their career trying to get to.
Once you’ve aquired those things, once you’ve got your house, your car, furnished your place, etc., then you can focus all of your additional income in the future on saving, investing, etc., which most people never get to do. So focusing on when you can sell a company, but also how will it change your life, is really the way to think about it.
Wil Schroter is the founder and CEO of Bizplan. You can read more of his posts here on Docstoc or check out his blog and business plan software at bizplan.com.