If you're like a lot of founders, you're probably trying to time the sale of your business to coincide with the top of an economic cycle.
And, given today's headlines, you may be wondering if you have waited too long.
However, timing the market could be a fool's errand, and contemplating your endgame requires a completely different approach.
On the surface, timing your exit seems to make sense. In most industries, an economic cycle can impact valuations by up to two "turns", which means that a business selling for five times earnings at the peak of an economic cycle may go for as low as three times earnings at a low point in the economy.
The problem is, when you sell your business, you must do something with the money you receive, which usually means buying into another asset class that is being affected by the same economy. Sure, you may diversify a bit, but most asset classes you'll consider - from residential real estate to stocks and vacation property - generally move in the same direction as the economy.
Design your endgame and discover the best time to sell
Instead of trying to time the market, look inward and consider selling when the time is right for you and your business. Know that no matter what the economy is doing at the time of your sale, you'll have the opportunity to invest in the same market.
In the end, your health, energy, dreams, and financial position are the most important things to consider when designing your endgame.
It can be tempting to try to time the sale of your business to coincide with a peak in the economy. However, unless you have a crystal ball, it’s impossible to know when that moment will hit.
There are several better ways to decide when to sell, and our new eBook below outlines four alternatives. 👇🏻
