Growing a company to sell for prosperity is one of the most guaranteed ways to wealth, yet, just like roulette, the odds are stacked against you. Unlike roulette, business owners are able to influence the odds. Black Jack is a far better comparison with “16” being the stick or fold number (usually!). Knowing when to stick or fold is a key part of business strategy and the timing of an exit is critical. Ideally sell before you peak, before the next wave of investment, with a great track record and when the market has prospects for your sector and you have a team able to drive growth beyond you.
It is vital to be objective as many a deal is lost when the shareholders’ needs drive the timing rather than what is right for the business. It is also important to analyse the forecast net proceeds versus the net sale income you will receive, versus the time wealth achieved from a sale.
Like a casino player, many owners inherently know when is right for the business; yet miss the window and carry on the gamble too long by which time it can be far too late. But why? The main reason we have observed is the failure to be utterly objective about where the business truly is, in combination with being selfish about individual needs rather than what is right for the business.
How many people miss the best time because they personally are not ready or don’t have the imagination to see the next personal game? In other words it’s the right time for the business, and as a CEO listener, they know/feel this, however, as shareholders the sums are never quite right, the next initiative just needs finishing etc. They go against their intrinsic knowledge, “there could be a windfall around the next corner”. How much of that is true or actually how much is driven by natural fear of the next personal journey? “Will I be happy, will I discover what to do next, will I be bored, who will respect me, what if I’m making a big mistake?” A recent survey we carried out amongst owners that had sold their business confirmed one thing we have suspected – never once has the next journey been what they thought it would or should be, it has always been different yet often better than ever imagined. Look at the facts, take a leap of faith and walk out on winning streak.