In the last six months alone, I’ve spoken to more than 100 business owners about their plans. And here’s what I can say: Most business owners consider selling too late. .
And by the time they realize it, they’ve already missed the most valuable window of time in their financial life.
Hi! I’m Ryan Guth. I’m the author of Permission to Exit: Prepare to Sell Your Business Without Regret. I’m also a CERTIFIED FINANCIAL PLANNER™ professional, personal wealth advisor and strategist for owners of businesses that range in value from $7-$70M.
Owners of seven and eight figure businesses are growth-oriented risk-takers. They will tend to drive the business as far as they can until they come to a roadblock, or a terrain that they can’t seem to overcome on their own. And it makes sense. When do we call for help? When we’re stuck. That’s human nature. Those with entrepreneurial DNA want to see how far they can go as the leader.
Here’s the issue. And I know this is going to sound counterintuitive, but I’m going to say it anyway. The best time to call for help, or even hand the keys to a new driver, is when you’re on smooth terrain and gaining speed.
It’s when everything is going right.
In this video, I’m going to show you why selling before you think you should - sometimes years before - could literally double or even triple your total exit outcome.
When I was a kid, I used to jump off swings at the playground. I mean, who didn’t? Come on. And there was one rule I learned the hard way.
Jump on the way up, and you fly.
Jump on the way down, and you eat wood chips.
That’s exactly how selling a business works.
I call it “Swing Theory”
In my opinion, lots of business owners have it backwards…
They think: “I’ll sell when I’m no longer challenged.. I’ll sell when growth slows. When it’s less fun. I’ll sell when I’m ready to be done.”
That feels logical. It might even sound responsible.
But that thought process could be eating your lunch.
Let’s dig deeper.
Buyers, especially financial buyers like Private Equity funds, don’t pay for what your business is today. They pay for where it’s going.
They’re buying the future story of your company. .
And if your growth is slowing, because the business is less exciting than it used to be. Or maybe it’s just stable because you’ve built a great team and it’s able to run without your day-to-day involvement. Or maybe family circumstances have changed and now feel pulled to spend more time with your spouse or kids. Personally, that’s all good, healthy stuff.
But think back to the playground swing analogy. In the circumstances I just listed, ask yourself this: Are you on the upswing or on the downswing? And “stability” isn’t growth. If you’re not growing, you’re shrinking. Choosing to sell after growth has slowed, means you’re trying to sell a compelling future at a time you’ve stopped believing in a compelling future .
In my opinion, you’ll begin negotiations from a place of weakness.
You may have gotten fat, dumb, and happy. And I can’t blame you! You’ve got a good business!
But…This will inevitably lead to lower multiples,more deal friction. Potentially higher concentration of customer revenue. There’s a chance your customers got fat, dumb, and happy along with you. . At the end of the day, you’ll have less leverage at every step of the process.
But when you sell on the upswing… when the numbers are strong, the growth story is believable, and the momentum is visible… everything changes.
You’re confident. You’re selective. And you don’t need the deal.
And buyers can feel that.
I have a client in the event production space doing nearly $11M in revenue and on track for about $2 million in annual profit.
Made it through COVID. Pivoted as necessary. Everything’s working. The team is strong.
Revenue is climbing. Energy is high.
The business has real momentum.
And he recently said to me, somewhat tiredly: “I think I’ll ride this another five years.”
That sounds reasonable.
But here’s what those five years look like in practice:
The space continues to consolidate andPrivate-equity-backed companies start underbidding and eating your lunch.
New competition enters …with jetpacks.
Key people get old and retire..
Personal energy fades, because attention gets spread thin. Aging parents need care, kids need more attention
And the business that looked unstoppable on the upswing slowly starts to flatten… or worse.
By the time he’d be ready to sell, the growth story that would have commanded a premium multiple is gone. And so is a significant portion of his potential exit value.
Instead, we’re exploringselling now - while he is still on the upswing.
Thisone timing decision will change his entire financial outcome.
Now here’s where this gets interesting. From my conversations, I get the impression that people don’t realize that there will be an obligation beyond closing the sale of your business. I work with business owners of “boring” businesses mostly. These people were highly skilled in their trade and built themselves a job that turned into something more. Maybe even over multiple generations. The company wasn’t founded to exit, necessarily. It was built to run as long as possible to serve the needs of the founder’s family and their customers. The term EBITDA wasn’t even in their vernacular when they started.
So, here’s my point. When you sell to Private Equity, you’re often not done. In many cases, you’re just getting started on the next chapter.
PE buyers almost always require you to stay involved, continue leading growth, and, critically, roll a portion of your proceeds back into the deal. They want you to have skin in the game. They’re buying your business partly because of you, and they need you aligned with what happens next.
Here’s what that actually looks like:
Let’s say you sell your business for $20 million. You roll 20%, so $4 million dollars, back into the fund that acquired you. Now you’re partnered with a PE firm that brings capital, talent, systems, and an acquisition strategy designed to accelerate growth.
Over the next three to five years, you help grow EBITDA by five times.
That $4 million you rolled in? It could be worth another $20 million at the second exit.
First exit: $20 million.
Second exit: $20 million.
Total: $40 million.
And depending on your industry and the market for your specific skills, this doesn’t have to stop at two exits.
I’ve got another 40-year-old specialty subcontractor founder who is currently leading his old company as CEO with the backing of Private Equity dollars. They’ve gobbled up 6 or 8 other subs over the last three years and are getting ready to sell again. This will be known as my client’s “second bite of the apple”.
Again, he’s only 40, so he will very likely end up continuing to lead in some way for another 3+ years.
This is why the question, “How do I get out?”, is the wrong question.
The right question is: “How do I position myself for the most valuable next chapter?”
Now let’s zoom out from the financials for a moment. Because timing isn’t just a financial decision, it’s a personal one.
Here’s a scenario I see more often than you’d think…
Time goes on. You become an empty nester. The kids are heading to college. You and your spouse have always talked about moving to a different state… somewhere warmer, somewhere quieter, somewhere that’s been on the list for years. And you’re starting to think seriously about what the next chapter looks like.
Here’s the mistake.
They wait until they’re ready to move, then start thinking about selling.
But deals take time. .
And unless you sell to a competitor, you’ll almost certainly need to stay involved for three to five years post-sale to help grow the company with your new partners.
Which means if you want the flexibility to move in five years, you should be starting the process now.
Now, let’s talk about: taxes - an area YouTube and TikTok gurus can either save you millions or get you into deep trouble.
Tax planning saves you and your family from leaving Uncle Sam an unnecessary tip. But it takes time to implement. Chances are the tax team that you came into business with is not the one you should exit with. So how do you find the right tax team to save you millions when you sell?
If you have a wealth advisor (hopefully a CERTIFIED FINANCIAL PLANNER™ professional otherwise known as a CFP®, at minimum), they should’ve engaged you about this already. After all, your company is likely the largest single component of your net worth and also the biggest risk asset in your portfolio.
You need a quarterback. A conductor of the symphony. This is what I do. I take your family’s personal goals and values, reverse engineer the exit strategy, help you prioritize what to work on and when. This includes building the team AND calling the plays. A team with no leader is just a bunch of highly-skilled individuals running around the field doing what they think is best. If they score points, it’s by chance. And an orchestra without a conductor is just noise.
I. Connect. Every. Dot.: Tax, legal, bankers, brokers… If their contribution makes a meaningful difference on what’s wired to your account the day you close the sale of your company, I’m calling the plays.
Here are some signs you’re in a strong position to think about selling
● Your business is generating $1 million or more in annual profit. Things start to get a lot more exciting around the $3M+ profit mark.
● Year over year growth is strong or actively accelerating
● You still have energy for the business
● You’re getting offers to sell already
And a sophisticated buyer looking at your numbers today would see upside, not risk
If that describes you, there’s a strong chance you’re already in the ideal selling window.
The conditions that make your business genuinely compelling to a premium buyer don’t last indefinitely, and they’re rarely obvious while you’re in them. They’re usually only obvious afterward.
The best time to sell isn’t the moment it becomes obvious. By then, you’ve already given something up.
If you heard nothing else, here’s what I’d like you to take from this video
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Sell on the upswing, when you have momentum, leverage, and a growth story that commands a premium.
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Think in terms of two exits, not one. Structure your first deal in a way that positions you for a second.
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Align your exit with your life timeline, not just your financial one.
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And start earlier than you think you need to. Because the difference between those two decisions, early and strategic versus late and reactive, could easily be millions of dollars.
The way I see it, there are two paths from here.
You can wait, hope things keep going well, and try to time it perfectly later.
Or you can start thinking strategically now, while you still have leverage, momentum, and options.
If you want to understand what all this means for you, click the link in the description below.
Happy to have a conversation about your numbers, your timeline, and your life goals, so you can make an informed decision about what is likely to be the biggest financial moment of your life.
My goal would be to help you discover your “number” - the amount you’d need to net post-sale to help de-risk your financial life and your family’s next chapter.