There is a question every entrepreneur asks at least once, usually late at night after a bad day: “Wouldn’t it be better to just sell?” I’ve asked it more than once. In 2009 I even answered “yes”, though not because I chose to. I simply had no other option.
That year I sold the majority stake in MarketOnline, Mediadot and Azerty (an online store and two e-commerce businesses I had bought the year before), in the middle of the crisis and under pressure. The alternative was bankruptcy. I saved what could be saved, but I regretted it for a long time. Not so much the decision as the fact that the crisis made it for me. That’s where today’s article comes from: how to tell when it’s time to sell, how to separate a good reason from a bad one, and how to prepare so that when the day comes, you are the one selling rather than the one being sold.
Signs that the time may have come
- You no longer bring the energy the company needs. A growing company needs a founder who wakes up wanting to work on it. If for months you’ve been dragging it along out of duty, the company feels it. The team feels it. Sooner or later, customers feel it too.
- The market needs a different scale or vision. Sometimes you’ve taken the business exactly as far as you know how. The next step means international expansion, joining a bigger group or changing the model, and you’re not the right person to lead that.
- A strategic buyer shows up. A player for whom your business is worth more than to anyone else, because it completes their product, brings them customers or saves them two years of development. Offers like that don’t come often, and they usually don’t wait.
- Your life changes. Family, health, moving to another country, wanting to do something else. The business should fit your life, not the other way around.
- Growth needs capital you don’t want to raise. If the next stage means funding rounds, dilution and a board, and you don’t want that, selling to someone who already has the capital may be the best path for the company.
Bad reasons to sell
- Panic. A crisis, a new competitor, a law changed overnight. In a panic you don’t negotiate, you give in. The buyer senses straight away that you’re in a hurry, and the price adjusts accordingly.
- A bad quarter. One quarter is not a trend. Sell right after your weakest result in years and you sell at exactly the lowest price.
- Boredom. Boredom is real, but it can often be fixed in other ways: hand over operations, bring in a CEO, start a side project. I’ve written about entrepreneur burnout and learning to stop; quite often what looks like boredom is actually exhaustion, and the cure is a break, not a sale agreement.
My simple test: if the business did really well next month, would I still want to sell? If the answer is no, I probably don’t want to sell. I just want to get rid of a problem.
What I learned from 2009
The big lesson of 2009 was that you don’t pick the moment to sell on the day you need the money. You prepare it years in advance. Back then I had grown on supplier credit with reserves that were too thin, and when the crisis hit I had no time. No time means no negotiating power. I wrote more about it in what twenty years of entrepreneurship taught me, but the short version is this: the best position to sell from is when you don’t have to.
The second lesson: regret isn’t only about the price. It comes from walking away from something you built with your own hands without having had time to say goodbye properly. Floria came out of that same year, also started in the middle of the crisis, so it wasn’t an ending. But it took me a long time to look back without a bitter taste.
How to prepare, even if you don’t want to sell now
The good news is that everything that makes a company sellable also makes it healthier. So preparation is never wasted, even if you never sell.
- Clean books. No personal expenses run through the company, no “arrangements”, no revenue you can’t show. The first thing a serious buyer does is financial due diligence, and every surprise either cuts the price or kills the deal.
- Contracts in order. With major customers, suppliers, employees and whoever wrote your code. Intellectual property must clearly belong to the company, not to a freelancer you worked with five years ago.
- A team that runs without you. If everything goes through your phone, the buyer isn’t buying a company, they’re buying a job for you. And they’ll pay far less for it.
- Documented processes. How a delivery is done, how a complaint is handled, how a campaign is run. What’s written down stays in the company after you leave.
- Clear monthly numbers. Revenue, margins, customer acquisition cost, how long a customer stays. If you don’t know them, the buyer won’t believe them either.
Valuation: between what you think and what the market pays
Every founder overvalues their business. That’s natural, you’ve put years of your life into it. But a buyer doesn’t pay for your years, they pay for what they’ll earn from now on and for the risk they’re taking. So it helps to look at comparable deals in your sector, to understand whether the market values you on profit or on revenue, and to accept that a realistic price and a closed deal are worth more than a dream price that never happens.
And get good advisers: a lawyer who has done this kind of deal before, an accountant or financial adviser who knows what due diligence looks like. They cost money, but much less than a clause you missed. In negotiation, what matters most is how prepared you are; I wrote a guide to negotiation years ago and those principles apply perfectly here.
The earn-out trap
An earn-out means part of the price is paid later, if the company hits certain targets after the sale. Sounds fair: if the business is as good as you say, you’ll get your money. The problem is that after the sale you’re no longer the one making decisions. The new owner can change budgets, the team, prices, or shift group costs onto your company. Suddenly the target becomes impossible, without you having done anything wrong.
If you accept an earn-out, and sometimes it’s the only way to close a deal, ask for simple, measurable targets clearly defined in the contract, with rules on what the buyer can and cannot change during that period. And make your decision as if the fixed part is all you’ll ever get. If the rest arrives, it’s a bonus.
What happens to the people
This is the part people talk about least and feel the most. The people who built the company with you didn’t sign the sale agreement, but they live with its consequences. Some things you can negotiate: keeping the team for a period, retention bonuses, terms for key people. Others you can’t control.
What you can control is how you tell them. Not through rumours, not in an email sent on a Friday evening. Directly, with what you know and what you don’t know yet. People forgive bad news, but they don’t forgive being the last to find out. If you have a co-founder, this conversation starts much earlier, and ideally you talked about it from day one, as I argued when I wrote about choosing a co-founder.
In short
Sell when you decide, not when circumstances force you. Sell out of analysis, not panic. And prepare your company as if you were selling it tomorrow, even if you hope you never will. Worst case, you end up with a healthier business.
Have you ever seriously considered selling your business? What stopped you, or what convinced you?