How to Time the Market & Sell Your Business for Top Dollar

How to Time the Market & Sell Your Business for Top Dollar

As a business broker, I’ve come to understand the market conditions for selling your business at absolute top dollar.

So, what are those conditions?

There are none—and it doesn’t matter.

Timing the market, interest rates, or anything else you think will drive up the price of your business is largely irrelevant.

Good businesses will always sell for good prices. Bad businesses will not sell.

I talk to a lot of business owners who try to strategize the best time to sell. The reality is, factors like elections, next-quarter projections, or waiting for interest rates to shift don’t necessarily move the needle much.

This isn’t like the housing market. While ruling out all external factors would be short-sighted, they aren’t what drive the sale of a business.

The main driver of why a business sells is simple: it’s a good business.

What makes a good business? Let’s break it down and step into the shoes of a business buyer.

Buyers view this as an opportunity—an investment. Sure, most buyers care about profitability, but they also consider other factors. Let’s start with the finances, then cover additional aspects that can drive the sale price of your business higher.

Your Business’s Finances

Businesses generally sell for a multiple of what they earn—based on past performance.

When you sell your business, buyers and lenders will examine the last three years of performance. They’ll analyze your Profit and Loss (P&L) statements, tax returns, balance sheets, and cash flow statements.

You want your past three years of P&L to show steady, positive growth.

If you had a dip in revenue or earnings two years ago, it doesn’t mean you can’t sell. However, be ready for buyers and lenders to scrutinize that down year.

If you want competitive offers and a high valuation, sell when you can show consistent growth over three years. This requires an exit plan—and sticking to it. Unfortunately, many owners hit a wall and decide to sell, only for their stagnant or declining numbers to make buyers skeptical.

Avoid this by planning ahead, focusing on your financials, and ensuring your P&Ls show three years of positive growth and consistent line items (COGS, operating expenses, net income).

Owner Dependency

This is a deal killer for many businesses. If your business revolves around you, the owner, selling becomes much harder.

From a buyer’s perspective, removing you from the equation may hurt revenue, customer relationships, or vendor partnerships.

If you’re generating revenue, visiting job sites, or working 40+ hours a week in the business, it limits your buyer pool to those with direct industry experience and a willingness to work as hard as you do.

To increase the appeal of your business, reduce owner dependency. Focus on building a strong team and delegating responsibilities.

Start training key employees now. Give them six months to manage operations while monitoring revenue.

I often ask business owners: If you took a six-month vacation right now, what would happen to the business?

Would revenue drop? Would customers be calling your phone? Or would things run smoothly?

The more you can position your business to operate without you, the better chance you have of selling at a higher price. A business that runs independently attracts more buyers—and competition among buyers can increase the sale price.

Customer Concentration

Customer concentration is another common issue that can prevent a sale or drive down the price.

Do any of your customers or clients account for more than 20% of your revenue?

Let’s step into the buyer’s shoes again. If they purchase your business and a customer responsible for 38% of revenue leaves (without a long-term contract), the buyer’s investment could be at risk. This is a major red flag.

Focus on diversifying your customer base to avoid over-reliance on a few clients.

Side story: I once worked with a business owner in the tech space. The company had fantastic growth, $10M+ in revenue, and the owner was completely removed from operations—a dream for any buyer.

But there was a problem: one client made up nearly 80% of revenue.

Without a long-term contract, the business became risky. The owner struggled to sell for their desired price.

If customer concentration exceeds 20-25%, take the time to reduce it before selling. Addressing this concern will make your business more attractive and prevent buyers from lowering their offers.

Conclusion

If you address these three key factors—financial performance, owner dependency, and customer concentration—you can create a buyer frenzy.

When buyers compete for your business, you’ll receive multiple offers and have the luxury of choosing the best one.

• You want your broker sending out LOI deadline emails.
• You want buyers to know there’s already a full-price offer on the table.
• You want to select from a pool of strong buyers.

While industry nuances matter, these three factors will significantly improve your chances of selling quickly and for full asking price.

This isn’t about timing the market—it’s about positioning your business as a desirable opportunity buyers will compete for.

Take the time to prepare your business properly so you can achieve a successful and profitable exit.

If you’d like assistance with exit planning, feel free to reach out to us at Kelliher Acquisitions.