When is the Best Time to Sell a Family Business?

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Welcome back. I'm your host, Jim Berner. If you have ever considered selling your business or wrestled around with it in your head, you know, especially about if it's the right decision, this is your episode. Because today, we are talking about when is it the best time to sell your family business.

You know, interesting article that came across, my desk the other day, and it was written in December of twenty five. Raymond James, you know, eighty eight percent of business owners plan to transition some or all of their financial stake within the next ten years. And so the key there is really, you know, they plan to, but but when? When is the best time to be able to do it?

And this is a staggering number. Right? You know, business owners, you know, when they try to sell their business, they're like an investor that tries to sell their stock. You know, they're trying to time the market at exactly the right point in time.

If you sell too early, you're like, oh gosh. There was all this growth that could have happened in my business, and I missed out on that. Same thing where if you wait too late and the business starts to decline, then you're waiting for it to come back up. But will it?

You know, that's that's a huge risk that you're really gonna take. So is it possible to sell your business at the right time? You know, is there a peak to when it is? When when is the exact time that you should be selling your business?

So what I want you to do is stick around, and we're gonna dive into the top three reasons of when it's actually gonna be the best time for you to sell your business. Running a family business comes with unique challenges that not everyone understands. At Meridian, with over three decades of experience, we've seen these challenges firsthand. That's why we created Meridian members, an exclusive platform designed to equip you with everything you need from articles and videos to in-depth insights on growth strategies, company culture, and streamline operations.

We tackle the toughest family business challenges so you can focus on what truly matters, building a lasting legacy. Whether you're working on team dynamics or preparing for your next leader, Meridian members is here to support your every step. Meridian is the trusted resource you can count on. Visit us at ask meridian dot com to learn more about the resources that will drive your business forward.

Alright. Welcome back. When a business owner makes the decision to sell, it's not just a financial decision. Obviously, it's a pretty big component.

You have to be able to sell it for the right price because you wanna retire. Right? You wanna take your life to the next chapter, the family legacy to the next chapter. But it's a very emotional emotional situation that you're in.

This is a business that, you know, if you're not the first generation, your father maybe started it, your mother maybe started it, grandma and grandpa maybe started that business. Your family works there. You go there every day. You see these employees that are your true family.

And so, you know, Ken Koger and I, we talked in a previous episode about some brief indicators about selling your business, but I'm going to cover the exact time you should consider selling to maximize value to get top dollar. So here we go. Let me ask you this question. If I strategically sold my business today, would I enjoy my time even more than what I'm doing right now?

So ask yourself that question. If if I strategically sold my business today, would I enjoy my time even more than what I'm doing right now? So selling should be a strategic choice, not an emotional escape. Right?

Don't confuse a triggering event such as, you know, a ship sinking. Right? You are you know, you're cut out of it for anymore or this business is no longer fun. You know, common selling triggers can cause knee jerk reactions.

You know, losing a big customer, for instance. Right? This is often a concentration problem that has existed for years down the road. Owners sell after the risk becomes super visible and not while it's it's hypothetical.

You know, declining profitability. You know, if you're looking at your p and l's every single day or even once a week or monthly, you and I both know that it it's not sudden. Right? You're noticing the changes.

Usually, there's there's compression in margins. There's cost creep that's going on, underinvestment in maybe people, systems, processes. Maybe it's actual physical assets in that point too. The next one is not having a clear growth trajectory.

And this one is huge. Right? If you're not growing, you're dying. And and let's be clear.

I I hear you when you say, hey. Look. I'm not trying to be this hundred million dollar company. Totally fine.

You don't have to be a hundred million dollar company. But having a small amount of growth each year really helps prevent any form of declining revenue or a declining business in any sort of way that when a buyer comes in, they see, oh, well, the business is declining or it's lost money. So it's no go. I'm not gonna pay top dollar for this.

So these aren't reasons to immediately sell. Right? So Meridian is here to help you. Others sell because the business no longer fits their life, values, the season that they're in, and that's wisdom.

It's not failure. You know, the tragedy is selling too late after the value has declined or too early without understanding what the business could be worth can really hinder what the progress is of what you're trying to achieve later down the line. The best time to think about selling is when the business is healthy, it's growing, and still fun to you because that's when you have options. Now let me ask you another question.

Would you buy your business today if you didn't already own it? Come on. I know you, and I know you already said yes because it's your business. Right?

Like, why wouldn't you buy your business? Most businesses, most business owners I talk to know exactly what red flags look like, when to buy a business. You know, they're in this acquisition mode, and they want to be because they're growing. Sometimes business owners need outside perspective, though, which is exactly why Meridian, again, comes into that play.

In over thirty years, we've been working with business owners like yourself to take the blinders off, open up the hood, see exactly what's going on in the business. But the question reframes everything about, you know, your business. Is the risk of your business acceptable? Like, is it very high?

Is your business growth exciting, or is it exhausting? Is the business dependent solely on you in very unhealthy ways? It's okay for you to be able to do certain strategic items within your business. But if it's very unhealthy that it relies upon you, you can't even step away, that's a different conversation to have.

But here's the thing. You enjoy what you do. This isn't a fire sale, but what you need is an exit strategy. And whether it's twelve months or it's five years out, you need to have a strategy to be able to move forward.

So now let me ask you this question, and this is the number one thing to know if you are ready to sell your business and it's the right time. Are you having fun? Do you enjoy what you do every single day, or is it tough to get out of the bed? When owners say this, what they usually mean, you know, they feel that the problems are repetitive instead of stimulating.

Their role has shifted from visionary to firefighter. The business is draining energy rather than giving it, and that matters because buyers do sense this. Decision fatigue is you know, it really slows down everything that goes on within your business. And if you have decision fatigue on whether or not you should sell, chances are you're going to wait too long, and then the value drops off.

So by the time the numbers show it, the value has already eroded away, and that's the tough part about it. If you're no longer having fun in your business, then it's the right time. If you know that your business or you yourself would actually be having more fun doing something completely else, let's say, for instance, being with your grandkids, being with your wife or your husband, those key components are what's true. And let me give you a quick story.

After the sale of a business on the West Coast, you know, a gentleman who was, taking care of his wife, you know, decided that it's now time. I need to spend more time with my wife. I need to spend more time with my kids. I need to spend more time with my grandparent or my grandchildren because I don't know when, you know, it's gonna be me.

And so he knew that his legacy, the next chapter, was needing to get out. And so we really helped him achieve the goal of, you know, his financial goal, but then also the emotional one. And even at that, one of his pieces was keeping his daughter employed at the business. So we talked to the buyer about keeping his daughter on.

So that way she had a job. She had an income. She had a way to be able to support her family. So it's not just you go off into the sunset and everything happens.

But in reality, it's really determining and providing clarity about what's next. If you are questioning whether or not you should be selling your business, what the next move is that you should make, reach out. Right? We're here to help have discussion.

In in the first place is really understanding where the value of the business is right now and understanding then the clarity needed to what your next step looks like and how we get you there. I'm Jim Berner with Meridian Associates. Thank you again for joining me on Family Business Breakthroughs. We'll see you next time.