The decision comes down to what is expected to change over the period.
Owners often start thinking about a sale well before they are ready to approach buyers. The difficulty is deciding whether another year or two will materially improve the outcome, or simply delay a process which already takes time.
That decision usually comes down to what is expected to change over the period. If the business is about to report materially stronger earnings, reduce a major concentration risk or complete another development which buyers will value, waiting can make sense. If the business is already performing well and the remaining work is mainly preparation, there is usually little benefit in postponing it.
Remember that the sale process takes time
The sale process itself is lengthy, from the initial preparation work before buyers are approached, followed by outreach, initial discussions, offers, due diligence, legal negotiations and completion. Even where there is strong buyer interest, the full process can easily run for several months.
This matters when an owner says they want to sell “next year.” If the objective is to complete a transaction next year, waiting until next year to begin preparing can already put the timing under pressure.
Starting earlier gives you time to prepare the business while it continues trading. Buyer materials can be prepared, potential acquirers identified, valuation issues understood and obvious diligence problems dealt with before they become urgent. For this reason, it often makes sense to start early rather than wait for perfect timing.
When waiting can genuinely improve the outcome
Waiting makes sense where a specific development is likely to change the way buyers assess the business.
Assume EBITDA is currently £800k but recently signed contracts are expected to increase it to £1.2m. If those customers have not yet started trading, buyers may give limited credit to the additional £400k unless there is sufficient evidence the mitigate the risk that this additional revenue won’t materialise. Several months of actual trading may help to demonstrate that the revenue and margin are real, and the valuation discussion may look materially different.
The same applies where customer concentration is about to fall significantly, a major contract is approaching renewal, a new product is starting to contribute meaningful revenue or a restructuring is expected to produce a clear improvement in profitability.
In each case, waiting allows the seller to replace an argument about future performance with evidence. However, where enough evidence is already available, waiting might actually dilute the current momentum and the growth trend may not look as appealing one year from now.
Common, yet poor reasons to wait
Poor historical financial information is a common reason founders wait before they sell. However, it’s generally not a good reason to wait another year or two. Buyers will normally want around three years of historical information anyway, so weak prior-year reporting still needs to be dealt with. It generally makes more sense to clean the historical books properly now and build consistent reporting from that point onwards.
There can also be a tendency to wait for a cleaner financial year-end. This is sometimes justified, but buyers do not value a company solely from its latest statutory accounts. If the business generated £700k of EBITDA in the previous financial year but is already producing £900k on a reliable last-12-month basis, waiting for another set of annual accounts may add relatively little.
Starting preparation does not mean starting outreach
Preparing for a sale and going to market are two different decisions. You can start preparing financial analysis, understanding valuation, identifying likely buyers and fixing operational issues without contacting anyone.
This gives you more control over timing. If the business reaches the milestones you were waiting for, you can launch quickly with the necessary information already prepared. If performance develops differently, you can delay outreach without having committed yourself to a transaction.
By contrast, waiting until the business feels completely ready before doing any preparation often means discovering the same issues at the point when you actually want to sell.
To conclude…
It makes sense to wait where a specific and material development is likely to improve the valuation or remove an important buyer concern.
It makes much less sense to wait simply because the business could be somewhat larger next year, the previous financial information needs work or another statutory year has not yet closed.
If you are considering a sale within the next 12-24 months, preparation can usually start now. The decision to approach buyers should then depend on whether the business has enough evidence behind its current performance to support the valuation you want.