Depending on your personal circumstances, the best time to sell your business is when you believe that you have taken the business to the highest level that you are capable of, maxed out what you believe to be the most profits possible and now you want to retire or move on to another business. If your business is in financial difficulty or if you must sell because of health, you may not have the ability to defer the sale of the business. Assuming that you have a successful business, when is the best time to sell your business?
Historically many buyers of businesses only looked at historical profits and did not analyze the future of the business in order to determine a price to offer the business owner. In this market, I strongly suggest that investors start looking into a crystal ball and look at current economic events more than every before in order to value a business. World wide events have impacts on local businesses. They could buy goods from a foreign country and being impacted on currency changes and the fluctuation of the dollar, Canadian, US or even the euro. On top of that, if mortgage rates increase, that will also mean that interest rates will go up for business owners and the consumers. If consumers have more borrowings now than ever before, if rates go up, will they have as much discretionary spending as they did in the past? When the full impact of HST takes place, will that have an impact on the business owner’s’ business? Will that affect profits, in the short term, long term? If there is a short term anomaly only, then you should wait until the anomaly finishes then list the business for sale. Selling your business in a period of uncertainty will not maximize the selling price of the business. You need to time your sale when profits are the highest, world wide events do not affect your business and if they do, in a positive way. This is the best time to sell your business.