Exit timing and price: WHEN to sell? How long does it take?

We are pleased to host Basil Peters, perhaps the best known name in the world of early stage company exits.  His groundbreaking book, “Early Exits” has become a textbook for angel groups and entrepreneurs throughout the world.  His Strategic Exits Corporation provides M&A advisory services, and he is much in demand as a speaker at angel and entrepreneur events worldwide.    – Dave

By Basil Peters

Selling an entire company is similar to selling shares in the public markets – how much you can get depends on how the company is doing, but also on how the overall market is behaving. For many stocks, the overall market is a bigger factor than how the company is actually doing at any point in time.Basil_Peters1
This ‘external effect’ is even more pronounced when an entire company is being sold because the market for companies is much less ‘efficient.’

At the end of 2008, near the bottom of the debt bubble collapse, the overall stock market had dropped about 50%.  If there was a similar index for the value of entire companies being sold, I am sure it would have gone down much farther than that, and stayed near the lows much longer. This is, in part, because the market for entire companies is much less ‘efficient’ and therefore more susceptible to changes in sentiment and liquidity.

[Email readers, continue here…]    How Long Does It Take to Sell a Company?  Depending on whom you ask, and whether they are trying to sell you something, you will get different answers on how long it takes to sell a company.

The time to exit depends a lot on the company – primarily on how long it will take to get the company into a salable state, and then how much time the senior team has available to work with the M&A adviser.

A good rule of thumb is that it will take six to eighteen months from making the decision to completing the sale. Therefore, in order to execute the best exit, the decision to sell has to be made that long before achieving the peak in corporate value.

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