Your Shout: When is the best time to sell your business?

28 January 2005 by
Your Shout: When is the best time to sell your business?

by Tim Martin of chartered surveyor Fleurets
The answer to this question, which is frequently asked by potential vendors, can often depend on the nature of the business and the extent to which the trade could be described as "seasonal". For instance, if your business is traditionally busier in summer, you are more likely to generate serious interest in the spring or early summer than in the autumn or winter, when a potential purchaser would be aware that they could be struggling for trade in the early part of their ownership. Traditionally, the busiest period of the year for completions has been the spring. The market picks up after New Year, with more activity from purchasers, energised by the prospect of a new start, and vendors keen to sell after taking advantage of the busy Christmas period. The question of timing is usually of most importance to those seeking to remain in the trade. The idea of selling before finding the next business is unpopular, and the prospect of being idle and not having an income for any period of time is frightening and unappealing. However, it can prove to be the most efficient way in the long run. Trying to find the right business can be frustrating and time-consuming. Those parties who have already sold up are in a position to move quickly. They should be able to afford a better business and will appeal more to other vendors. In a competitive bid situation, this can be crucial. Those who buy a new business before selling their old one can often find themselves in the nightmare scenario of running two businesses at the very moment they need to be investing all their efforts in the newer enterprise. This can often lead to them having not one, but two struggling businesses. And it can often prove expensive, as bridging loans can cost more than traditional loans - and when the need to sell the original business becomes more pressing, the vendor is more likely to accept lower offers or make a panic sale.
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