When is the Right Time to Plan the Sale of Your Business

If you are a business owner, at some point you have likely asked yourself, “I wonder how much my business is worth.” Perhaps you’re considering selling, thinking about estate planning, or maybe you’re just curious if your business strategy is adding value.

We’re seeing that many sellers start reaching out to their trusted advisors such as bankers, accountants, lawyers, when they’re either forced to sell for unforeseen reasons or they’re wanting to sell within one year. Selling a business requires a lot of time and effort and we always recommend that the best time to plan for a future sale would be at least 3-5 years in advance of the sale.

By planning for a future sale 3-5 years in advance more value can be added to the business or the owner by:

  • Identifying key drivers that will create value in the business to maximize the selling price
  • Ensuring the business is saleable
  • Saving on taxes and reducing tax implications down the road
  • Allowing time to put management in place or create the proper processes so that a new owner can fill the current owner’s role
  • Identifying areas to reduce risk in the business

We always recommend that you get a valuation done on your business as early as possible. A valuation from a professional valuator gives you an objective understanding of the value of your business allowing you to:

  • Shorten the selling process
  • Understand your negotiating strengths and  weaknesses
  • Position yourself for a successful sale
  • Be more credible
  • Avoid conflict
  • Increase the funds you will receive upon the sale of the business

Similar to choosing any specialist service provider, it’s wise to seek out a certified professional who has adequate and relevant professional experience. At Portage we offer services that will assist in maximizing value when it is time to sell. As part of this process, we will identify key value and risk drivers associated with your business and help build a plan to improve the value of your company for a future sale.

Ryan Buist, CBV

Vice President, M&A and Valuations

Portage M&A Advisory