When Is the Right Time to Sell Your Business?

Every business owner eventually asks the same question: when is the right time to sell?

The honest answer is that the right time is almost never when you feel like it. The best exits happen when things are going well — when revenue is growing, your team is strong, and buyers are competing. Selling from a position of strength is the single biggest lever you have in getting a great outcome.

Here's how to think about timing your exit.

The Market Signals

External market conditions matter more than most owners realize. Pay attention to these:

Interest rates are low or stable. When borrowing is cheap, buyers can pay more. SBA-financed deals and PE acquisitions both benefit from favorable interest rate environments. When rates spike, deal volume drops and valuations tighten.

Your industry is in a consolidation cycle. If private equity firms or strategic buyers are actively acquiring businesses like yours, you're in a seller's market. Consolidation waves don't last forever — they're the best time to sell.

Multiples are elevated. Valuation multiples fluctuate with market conditions. If businesses in your industry are selling for 5x EBITDA today but historically trade at 3.5x, that premium won't last.

Buyer demand is high. When qualified buyers are competing for deals, you get better terms — higher prices, cleaner structures, fewer contingencies.

The Personal Signals

Beyond market conditions, pay attention to yourself:

• You've lost the fire. If you're showing up because you have to, not because you want to, that's a signal. Businesses run by disengaged owners eventually decline — and declining businesses sell for less.
• Your health or personal life is demanding attention. Selling a business takes 6-12 months of focused effort. If you're dealing with health issues or family obligations, it's better to sell proactively than to be forced into it.
• You've hit a growth ceiling. If scaling further requires capital, skills, or energy you don't have, a buyer who does have those resources may be the right next chapter for the business.
• You have something else you want to do. A new venture, retirement, travel — whatever it is, having a clear "what's next" makes the transition easier emotionally and practically.

The Financial Benchmarks

Your business should meet certain financial thresholds before going to market:

Revenue and Earnings Trend

Buyers pay the most for businesses with 3+ years of consistent growth. A flat or declining revenue trend is the single biggest valuation killer. If your revenue dipped last year, it may be worth waiting 12-18 months to establish a recovery trajectory before selling.

Clean Financials

If your books are messy — personal expenses mixed in, inconsistent accounting methods, no monthly financials — you need at least 12 months of clean records before going to market. Buyers and lenders won't underwrite sloppy numbers.

Owner Dependence

If the business can't function without you for two weeks, you have work to do. The more the business runs independently, the higher the multiple you'll command.

Recurring Revenue

Businesses with predictable, recurring revenue sell for significantly higher multiples than project-based or one-time-sale businesses. If you can build recurring revenue streams before selling, the ROI on that effort is enormous.

The Worst Times to Sell

Just as important as knowing when to sell is knowing when not to sell:

• After a bad year. Buyers will anchor to your worst recent performance. Wait for a recovery.
• When you're burned out and desperate. Desperation shows in negotiations. Buyers can smell it, and they'll use it against you.
• During major industry disruption. If your industry is in chaos, buyers will either lowball you or walk away entirely. Wait for clarity.
• Right after losing a key employee or client. Stabilize first. Going to market with fresh wounds invites aggressive re-trading during due diligence.

The Planning Horizon

The best exits are planned 2-3 years in advance. That gives you time to:

1. Clean up financials and maximize earnings
2. Reduce owner dependence
3. Build recurring revenue
4. Strengthen your management team
5. Address any legal, environmental, or compliance issues
6. Choose the right advisor and go to market from a position of strength

Even if you're not sure you want to sell, getting a professional valuation and understanding your options is never a bad idea. Knowledge gives you power — and optionality.

Start the Conversation

If you've been thinking about selling — even casually — the earlier you start planning, the better your outcome. I help business owners across California understand their value and build an exit strategy that maximizes their outcome. Book a free confidential call to talk through your situation.