Should You Sell Now or Wait Three Years?

Many owners settle on “three more years” as the answer to when they’ll sell. It feels like enough time to grow the business a little, tidy a few things up and get ready personally. Sometimes that’s exactly right. Sometimes three years turns into six, or the business has a bad year at the wrong moment. It’s worth testing the plan before you commit to it.

There’s rarely a perfect moment

Owners often wait for everything to line up: record results, a strong market, a good successor in place and a clear idea of what comes next. That alignment is rare. A business can attract good buyers even when some things could still be improved, and waiting isn’t automatically the safer choice.

The useful question is not “is now perfect?” It’s “what would waiting change, and is that change worth the time and risk?”

When waiting can make sense

There are good reasons to hold off. Waiting tends to pay when you have a specific, realistic plan that a buyer would value. For example:

• Earnings are clearly rising, and another year or two of results would show buyers the trend is real.
• The business depends heavily on you, and you have a plan to build a management team that can run it.
• One customer makes up a large share of sales, and you’re already winning others to dilute that.
• Your financial statements need cleaning up, or you need time to document contracts, processes and agreements.
• Personal or tax planning needs time to put in place. For example, a share sale of a qualifying small business corporation may qualify for the Lifetime Capital Gains Exemption, but the eligibility rules are detailed, so talk to your accountant and tax advisor early.

Our guide to preparing your business for sale over 12 to 24 months covers the practical side of this kind of plan.

When selling sooner can make sense

Waiting is also a bet. You’re betting that the business, your industry and your own energy will all hold up for the next few years. Selling sooner deserves a hard look when:

• results are strong now, and you can’t point to a clear reason they’ll be stronger later;
• your enthusiasm for the business is fading, which buyers often notice in the numbers before the owner does;
• a large customer contract, a lease or a key piece of equipment comes up for renewal or replacement in the next few years;
• your industry is consolidating and active buyers are looking now;
• your health, family or partners are pushing the timing regardless.

None of these means you must sell. They mean the “wait” option carries more risk than it might first appear.

Putting rough numbers on the choice

Here’s a simplified, hypothetical example. Suppose a buyer would pay about $3,000,000 for your business today. You believe that with three more years of work you could grow earnings enough to sell for $4,000,000. But plans don’t always run to schedule.

Remember that while you wait, you also keep drawing income from the business, and that counts in favour of waiting. Against it are three more years of your time, and the chance that you end up in one of the lower rows. The honest comparison is not $3,000,000 against $4,000,000. It’s $3,000,000 today against a range of outcomes three years from now, plus what you earn in between.

A clear view of what the business is worth today makes this comparison far easier. What is your business worth, even if you’re not selling? explains how buyers arrive at that figure.

Options in between

It doesn’t have to be all now or all later. Some owners find a middle route fits better:

• Prepare now, decide later. Do the work a buyer would value, then reassess in a year with better information.
• Sell and stay on. Many buyers want the owner to help with a transition, sometimes for a year or more.
• Sell part of the business. Bringing in a partner or investor can take some money off the table while you stay involved. See can you sell part of your business and stay involved?

Each of these has trade-offs in price, control and timing, so it’s worth understanding them before you rule one in or out.

Questions to answer before you decide

Before you settle on a timeline, try writing down honest answers to these:

1. What, specifically, will be different about the business in three years, and how confident am I in each item?
2. What would I do if my largest customer left next year?
3. Do I still want to be running this business every day in three years?
4. What do I need from a sale to retire or move on comfortably, after tax?
5. If someone offered a fair price tomorrow, would I take it? If not, why not?

Waiting is a decision too. Make it on purpose, with a plan and a date to check in on it.

If your answers point towards waiting, set out what you’ll work on and review progress every six months. If they point towards selling sooner, start by getting a realistic view of value and talking with your accountant about how a sale might be structured.

General information for business owners and buyers, not financial, legal, tax or accounting advice. Any examples are hypothetical.