If you are selling a business, timing is extremely important. But when is the best time of year to sell a business? It depends. Remember, selling a business is a process, and different times of the year can better lend themselves to supporting different phases of the selling process. But sometimes, the calendar can prove to be ultimately irrelevant. Let us look at two phases from the selling process, the marketing phase, and the closing phase, and examine how the time of year may play a role.
First, think from a buyer’s perspective: is there a time of year when a potential buyer may be more motivated to acquire your business? Consider the beginning of the year, through the first quarter. During this early part of the year, buyers typically hit the ground running, engaging sellers whose businesses catch their eye, forged with ambitious plans for the year ahead. A similar dynamic tends to present itself just after Labor Day, as buyers and investors coming off of a slower summer are recharged to attain any yet-unmet acquisition goals for the year. Marketing a business for sale during these parts of the year can be advantageous, assuming that your business is otherwise sufficiently prepared for this step.
Nevertheless, there is not actually a “bad” time of year to market a business that is sufficiently prepared for the process. Conversely, there is no advantage to be gained by prematurely marketing a business for sale simply to hit a date on a calendar. Thorough preparation and professional representation are the two best advantages you can give yourself when it comes to marketing your business for sale, no matter what the calendar says.
The best time of year to sell a business, as in close the sale, is whenever the sale and parties involved are ready to close. Putting off a closing even a few days to wait for month-end or year-end accounting convenience only leaves room for a host of unexpected disruptions. On the other hand, there may be compelling tax advantages to either closing a sale before year end or delaying closing until the start of the following tax year. In the case of waiting for the next tax year, the compelling advantage must be thoroughly weighed against the inherent risk of delaying the transaction.
Meticulous preparation and experienced professional representation are the biggest influences in reaching a successful closing on the sale of your business. If you want to help ensure a desirable result, look to those sources more than a particular time of year.
Are you considering selling your business? A good place to start is with our no-cost, confidential business valuation and consultation. Getting a professional business valuation will provide essential information so that you can make the best decision at the right time for you and your business. We are here to help whenever you are ready.