When Is the Wrong Time to Sell Your Business?

Many business owners will think about when they might sell their business, how much they can expect to realise, and what the selling/exit process will look like. However, just as there are ‘right’ times to sell a business, there can also be ‘wrong’ times to exit. Having successfully started, scaled, sold and exited my AM Bid business, I set up Business Sale Basecamp to help business owners navigate their way through the complexities of when and how to sell their business.

So, when might the wrong times to sell a business be? Below is a list of some scenarios which may be taken as the ‘wrong’ (or at least not the optimal) time to sell a business:

1.????? When the business is on the downturn

Business buyers tend to want to buy into a growing business. If they are looking at a business which shows revenues and/or profits going in reverse, they would need to clearly understand what the reasons and remedies for this are. Or there could be a general recession affecting many businesses/sectors, which will usually mean that offer prices will be depressed.

Revenues and profits going southwards will frequently result in an offer price that will be discounted from where it could have been had there been an upwards trajectory. What do the current year projections and the sales pipeline show … especially on contracted work? If the business owner believes in the recovery and future growth potential of the business, then why not stay on another year or two? The benefits should include obtaining a higher price and also protecting the business legacy … and your own reputation for success in business.

Of course, if you think that market forces have turned against your business and an early recovery is unlikely, then a ‘fire sale’ at a discounted price would be preferable to going out of business. ?

2.????? Having a business that is overly dependent on you or a very small number of key staff/clients

Businesses that have most/all of the decision-making and growth-generating activities sitting with the owner or another key person will present more risk to a buyer. As risk has to be priced in, the offer price will be lower. Getting their business less dependent on them is not an easy transition for some business owners. I appointed a Managing Director to my AM Bid business and he was in post for 3 years, almost up to the point of sale. This proved that the business could work without me. ???

This also applies if the business is overly reliant on a small number of customers. That customer that is 75% of your revenue seems like a golden goose … but it actually means that your revenue certainty is fairly insecure!

Spend some time on delegating some of the decision-making in the business and also on diversifying the customer group. An external specialist (especially one who has been on the journey before) could be just what you need to shift the dial.

3.????? When planned innovations or future market conditions are going to make demand for your business higher

Demand is a key consideration for business purchasers i.e. what is the likely future for the firm’s goods, services or works? If demand or market conditions are changing (or going to change) in ways that will be positive for your business, why sell now? If you sell before the increased demand is showing in your accounts, then offers will likely be at a lower value. Selling now means that the new owner will reap more of the benefits of the investment of time and money that you have put in.

If instead market conditions are going to work against your business, and you may be one of the first people to realise this, then you may think it is the right time to sell!

4.????? When you are not clear on what your future plans are

Owning a business can be a huge part of your life, identity and sense of purpose. Although no doubt working very hard, you may absolutely love what you do. In that case, how will you fill the void? If you are not clear on how you will spend your time post-sale (and most owners will exit within 6-12 months of a sale), then now be not the right time to sell. To help you reach a decision on this point, can you take a full week or even a full month (or more!) completely away from your business? This may help you to better understand your state of readiness for a business exit.

5.????? When the price offered does not meet your sale price expectations

It could be that you have a notional selling price in mind and the price you are being offered falls short of this. First of all, how do you know that your notional price is realistic? A business can only be sold at a price a buyer is willing to pay. This is where getting independent advice from a business sales specialist can help with managing your expectations. Given that most business owners overvalue their businesses due to being emotionally involved and not having the experience of business sale, you may need to adjust your expectations downwards a bit to achieve a sale … or the notional value may even be quite a bit higher than you realise, in which case you could be giving someone a bargain!

Some business owners need to achieve a minimum selling price to achieve their financial goals which could include: paying off their house (and any other debts); being able to start their retirement; and/or providing a capital sum for their family. Given that most business sellers will be out of their business within a year of the sale going through, can you afford to do without the salary/dividends that your business currently pays you? ??

6.????? When the terms of the sale aren’t right for you, even if the price is

It is important not to just see a big number and say “Sold”! ?You should get independent commercial and legal advice on the terms of the deal. Watch the indemnities and warranties that have to be provided and make sure that you can adhere to them. Look also at the earn-out criteria. How much of the sale price is paid at the outset? How much do you have wait for? How long do you have to wait? What are the terms that are being used to calculate the earn-out? Is there a restricted period when you cannot go into the same type of work? How long is this for? It is usually better to walk away from a sub-optimal deal … unless you really need to sell at that time.

7.????? If it seems that the buyer does not share your values

You will likely never get 100% alignment in values with the prospective new owner. However, there may be red flags during the offer, negotiation and due diligence phases around the cultural fit. Most business owners feel a sense of loyalty to their staff, customers and the business brand they have created. They may also need to work with the new owners through a transition period and/or have to achieve an earn-out, so being able to maintain a good working relationship will be important. If there are concerns, then consider discussing these with the prospective buyer rather than just pulling out of what in other respects could be a good deal. There may be some misunderstandings which can be fairly easily resolved.

8.????? When you are not adequately prepared for a business sale

The business sale process usually takes 6-12 months. In some cases, it can be completed quicker (I sold my business in 4 months!); in other cases, it can take longer. The business owner will be kept busy dealing with prospective buyers and professional advisers. I was asked to provide nearly 600 documents during the due diligence phase prior to the sale going through. We were well-prepared but many businesses are not. Additionally, during this period, business performance must not suffer or you may experience a late price chip i.e. the buyer offering a lower price … sometimes very late in the day due to due diligence findings or performance/market changes.

At Business Sale Basecamp, we work with business owners to help them get their businesses (and their own mindsets) ready for a business sale. Investing some time and money ahead of starting a business sale process can reap a higher sale price as well as give you more time back and less stress.

These are just 8 possible scenarios when it may be the wrong time to sell your business. It is never too early though to start thinking and planning for your business sale. I set up my AM Bid business to be sold within 8-10 years of launch … I sold at 8 years 9 months. There are actions you can take that will make your business more sellable and at a higher price as well as actions/inactions that will lead to a lower sale price.

To arrange a free 30-minute confidential introductory chat, please contact me at:

[email protected]

For more information on the help that is available for business owners, please visit:

Business Sale Basecamp - Enabling you and your business to be sale ready

To find out my thoughts on what the Business Sale Trends for 2025 are, please click on the link below to register for my upcoming LinkedIn Live broadcast:

https://www.dhirubhai.net/events/businesssaletrendsfor20257269639857105244160/theater/