Entrepreneurs often wonder when the right time to sell their business is. This can be a difficult decision, especially for founders who have poured their heart and soul into their company. However, one way to decide when to sell is when someone else is willing to invest more in your business than you are.
The Early Days
In the early days of a business, the founder is typically the one who is willing to invest the most time, energy, and money into the company. At this point, the business is not worth much, and the founder has little to lose. This means that they are often more willing to take risks and try out new strategies to grow the business.
Peach New Media
David Will, the founder of Peach New Media, experienced this firsthand. He started his business in 2000 as a reseller of web conferencing, and in the early days, he tried out many different strategies to see what would work. Eventually, he landed on selling learning management software to associations, and his business took off. By 2015, Peach New Media had 40 employees and received an attractive acquisition offer from a large private equity company.
The Decision to Sell
Despite the attractive offer, Will was conflicted. He loved his business and the team he had built, but he also recognized that he had become more conservative as his business had grown. The potential acquirer was willing to make a big bet on integrating Peach New Media into another one of its acquisitions, and Will realized that he had reached a point where his appetite for risk in his own business was lower than his potential acquirer’s. He ultimately decided to sell.
When To Sell
The point where someone else is willing to risk more than you are will be different for every entrepreneur. For example, if your business is worth $1 million today, you might be willing to risk it all for a chance at making it a $10 million company. However, if your business is worth $10 million, the risk of losing it all for a chance at making it a $100 million company might be too great.
Similarly, if your business is worth $100 million, it may be hard to imagine risking it all for a long shot at becoming a billion-dollar company. However, if you are the CEO of a billion-dollar corporation with ambitious growth goals, a $100 million bet might be worth it.
In conclusion, the decision to sell your business can be a difficult one. However, one way to know when the time is right is when someone else is willing to invest more in your business than you are. This is often a sign that you have reached a point where the risk of losing everything for a chance at greater success is too great. Ultimately, the decision to sell will be unique to each entrepreneur and their individual goals and circumstances.