The Timing of Selling Your Business: From a CFOs Perspective

Selling a business that you have poured your blood, sweat, and tears into is an emotional and stressful event. Expert guidance is a vital component to a successful exit, but what about maximizing value? Business brokers are fantastic at managing the actual process, but there is only so much they can do after you engage them. A company’s shortcomings will have a direct impact on its valuation, which is a harsh reality to prospective sellers.  

So, what then should the timing look like? When evaluating a business, the prior three years are most important, with the most recent 12 months being critical. Managing cash flow, balance sheet liabilities, and profitability are items that require significant attention. While financials are the focal point, operations, personnel, internal processes & procedures, customer concentration, and market conditional all play a part. Any business brokers will instruct you to “not take your foot off the pedal” during the M&A process, but that is a principle that should be taken to heart years prior to the exit. Especially for business owners looking forward to retirement, we often see that growth has either slowed or is now decreasing. To prospective buyers, stagnant growth is a yellow flag and declining growth is a red flag, resulting in lower valuations.  

At FinTeam, we partner with business owners who understand that maximizing their exit potential requires ample time to strategize and prepare. We utilize our M&A backgrounds to analyze every aspect of a company (just like we would an acquisition target), create a gameplan of areas in need of attention, and then put our fractional CFO hat on and go to work. This holistic approach of evaluating a company from multiple different perspectives provides us with the insights necessary to implement change that directly translates to increased exit potential for the seller.  

With FinTeam’s Broker’s Opinion of Value (BOV) reports, we are able to track the estimated selling price of a company at various intervals. This provides us not only the ability to value a business, but also track the impact of changes and improvements over time. 

If you are interested in seeing what your business is worth, send as an email at [email protected]