Timing the sale of your agency or consultancy is one of the most critical decisions you’ll make as a founder. While there’s no “perfect” time, aligning the sale with personal and economic factors can significantly influence the outcome. One common assumption is that selling at the market’s peak is the best strategy while selling during a downturn is to be avoided. However, the reality is more nuanced.
Selling at the top of the market does offer advantages. High profits make your business attractive to potential buyers, and there is typically a healthy pool of interested parties, giving you more negotiating power. But this upside comes with risks. A downturn often follows market peaks, and if the sale agreement includes performance targets or incentive payments tied to future profitability, a market downturn may make these targets harder to hit. Additionally, if part of the payment is taken in the form of company stock at its high price, that stock may lose value during an economic decline. Lastly, some buyers at the peak may be over-leveraged or financially unstable, a fact only revealed when the economy shifts downward.
Conversely, selling after the peak, when the economy is in recovery or early growth stages, may offer less apparent benefits. Buyers who have weathered the downturn are often more robust and financially stable. If your sale agreement includes stock or performance-based incentives, these are more likely to be realized as the market improves. Stock prices tend to rise during this period, and meeting growth targets becomes more achievable in a recovering economy. Buyers are typically more cautious, but their foundations are more robust, making them reliable partners for a successful deal.
Fortunately, in our global industry, there is nearly always a pool of quality buyers seeking out well-performing agencies. Even during a downturn, while the situation may not be ideal, selling a quality business can still yield good results. The right buyers remain interested in acquiring companies that show long-term value and potential for growth.
In summary, it’s often better to focus on the timing that suits your business’s maturity and growth stage, as well as the founders’ and second-tier management’s age and readiness. While the economic cycle is important, aligning with your internal growth and leadership maturity is often a more crucial factor for a successful sale.