The Direct Answer
Waiting an extra year to sell your business carries a real cost. You can lose multiple if the market shifts, miss a hot industry window when private equity rotates capital elsewhere, or expose your numbers to a soft year that pulls down your three-year average. The decision to wait should be driven by preparation status and market conditions, not avoidance. If you are not prepared, you will leave money on the table, and the haircut can be massive. If you are prepared and the market is hot, waiting often costs you the deal of a lifetime.
Why The Year Matters More Than You Think
You think a year is just a year. The market does not see it that way. Multiples move with interest rates, with private equity appetite, and with industry heat cycles. The highest multiples in recent memory landed just before COVID. The lowest landed just after. They climbed back up, then came back down. A single year can mean the difference between an A+ deal and a C deal.
There is a real example worth knowing. A business owner sold his company at the absolute top of the market. Had he sold the same company today, he would have received roughly 90% of what he originally got. He took a massive payout. Had he waited, that opportunity would not have existed. The window closed. Industries get hot, and when they get hot, you take it.
The Bare Minimum To Be Ready To Exit
You asked the right question if you are asking what the floor looks like. The bare minimum is not a single item. It is a stack.
You need an identity decision first. You have to say out loud that you are going to sell. That mental commitment drives the prep work. Without it, the documents do not get built and the financials do not get cleaned up.
You need a plan that runs five years, four years, three years, two years out. That horizon lets you track multiples, watch your industry, and align your timing with market conditions. You do not announce this to your team. You keep it in house.
You need standard operating procedures that work without you. You need org charts. You need job descriptions with decision rights defined. You need three years of strong, clean financials that you have walked through consistently. This is part of the READY gateway assessment that determines whether you can launch a sale process.
The Vacation Test
Here is the test that tells you when you are actually ready. Can you take a full month off without your phone going off, without emails interrupting you, and without your team needing decisions from you? If yes, you are close. If no, the business still depends on you, and a buyer will see that immediately.
The vacation test is also a selling point. When you sit across from a private equity buyer, a strategic buyer, or a private investor, and you can say you took a full month off without a single call, that is music to their ears. They are buying a business that runs without the founder. Prove it.
When Waiting Actually Helps
Waiting helps when you are not prepared. If your SOPs are missing, your financials are messy, your org chart is informal, and your team cannot run without you, waiting is the right move. Selling unprepared guarantees a haircut. The haircut may not be small. It may be a massive cut on multiple, on terms, on earn-out structure, and on cash at close.
Waiting also helps when a good M&A advisor or consultant tells you the launch window is wrong. Multiples cycle with interest rates and private equity sentiment. A skilled advisor will tell you when to pause and when to launch. That is what you pay them for.
When Waiting Costs You
Waiting costs you when you are prepared and the industry is hot. Heat cycles do not last. Private equity rotates between sectors based on returns, regulatory changes, and capital availability. When the heat moves, your multiple moves with it. The EXIT framework tracks these timing signals so you can launch when the window is open.
Waiting also costs you when interest rates shift against deal financing. Higher rates compress multiples because buyers cannot finance the same purchase price. A year of rising rates can shave 10 to 20% off your enterprise value with nothing else changing.
Waiting costs you when a soft year drags down your three-year average. Buyers underwrite based on trailing performance. One bad year inside the window forces you to either wait three more years to roll it off or take a reduced offer that reflects the dip.
The Timing Parallel
There is a reef in Moorea about half a mile from shore. If you want to surf it, you have to time the waves. Your shoulders will be sore from the paddle. There is timing involved in surfing, in entering a roundabout, in taking off on an airplane, and in exiting your business.
Timing is not luck. It is preparation meeting opportunity. The owner who prepared for five years and watched the market cycle catches the wave. The owner who decided last week wants to sell in 90 days paddles into a flat ocean and comes home with nothing.
The Letter Grade Reality
If you have not prepared and you try to sell in three to six months, you are not getting an A+ deal. You are not getting an A deal. You are not getting a B deal. You will probably get a C or a D. The D stands for don’t do it.
The letter grade comes from preparation, not from hope. Buyers see what you have. They price what you show them. A clean, prepared business with three years of strong financials, documented SOPs, and a vacation-test team gets the A+ multiple. Everything else gets discounted.
Frequently Asked Questions
Should I wait an extra year to sell my business if multiples are low right now?
Wait only if you are not prepared and you can use the year to build SOPs, clean financials, and document decision rights. If you are prepared and multiples are low because of a temporary cycle, talk to an M&A advisor about timing. If you are prepared and the industry is hot, do not wait. Hot windows close.
How much can waiting an extra year cost me on multiple?
It depends on industry heat, interest rates, and your numbers. Real-world examples show 10 to 20% reductions from rate moves alone, and 30 to 40% reductions when an industry cools off. One owner who sold at the top would have received 90% of his original price had he waited.
What is the vacation test for selling a business?
The vacation test asks whether you can take a full month off without phone calls, emails, or decision interruptions. If you can, your business runs without you and buyers will pay a premium. If you cannot, the business depends on you and the multiple drops.
How far out should I plan to sell my business?
Five years out is ideal. Four years works. Three years is the floor for full prep. Two years is rushed. Anything inside 12 months without prior preparation guarantees a haircut. The horizon lets you track multiples, watch industry cycles, and align your exit with the right market window.
Do I need to tell my team I am planning to sell?
No. Keep it in house. Premature disclosure creates retention risk, vendor anxiety, and competitive exposure. Work with your M&A advisor, your accountant, and your inner circle. The team learns when the deal is structured and the new ownership is ready to communicate.
What documents do I need before I sell my business?
Standard operating procedures for every core function, an org chart with defined decision rights, written job descriptions, three years of clean financials, customer concentration analysis, vendor contracts, employment agreements, and a data room ready for buyer diligence. Missing any of these signals risk and reduces the multiple.
Why do business multiples change year to year?
Multiples move with interest rates, private equity appetite, industry sentiment, and broader economic conditions. Higher rates compress multiples because buyers finance less. Hot industries command premium multiples until capital rotates elsewhere. A skilled M&A advisor tracks these cycles and tells you when the window is open.
Can I sell my business in three to six months without preparation?
You can sell. You will not get a strong deal. Without preparation you will get a C or D grade offer with a discounted multiple, weaker terms, longer earn-outs, and less cash at close. The buyer prices the risk of inheriting an unprepared business. The discount is real.
What is the difference between waiting and stalling on a sale?
Waiting is strategic. You wait because you are completing prep, watching multiples, or aligning with an industry cycle. Stalling is avoidance. You stall because you cannot decide, you fear the change, or you have not done the work. Waiting builds value. Stalling destroys it.
How do I know when the launch window is right for my business?
Three signals confirm a launch window. Your prep is complete and SOPs work without you. Your trailing financials show strong, clean three-year performance. Your industry is showing strong multiples and active buyer interest. When all three line up, you launch. Your M&A advisor confirms the call.
Full Transcript
Hands down, one of the most common questions when it comes to selling a business is, what happens if I wait for a year? And I’m going to share with you, there’s a couple of different answers, and this is a fantastic question. I’m Scott Sylvan Bell, coming to you live from French Polynesia. I’m on Moorea, on a perfect day to talk about business, sales, multiple, selling your business, and a fantastic day to talk about you. So let me start by saying iaorana.
Selling your business, there is a timing effect to this, and there are times where you’re going to want to wait. If you’re not prepared, and you haven’t done the necessary steps to get your business prepared to sell, then you are going to leave money on the table. Hands down, you’re going to leave money on the table. And it may not be a little bit, it may be a lot, it may be a massive haircut, and let me just say ouch.
So you want to make sure that you have your standard operating procedures in place, your org charts, your job descriptions, your financials are very strong, like you’ve gone through them consistently, and for the last three years they’ve been good numbers. You want to have tracked where the multiple is. That’s something, if it’s on your horizon to sell in five years, four years, three years, two years, and that’s on your horizon, you should be tracking what those multiples are and starting the conversations like, hey, what would it be like to sell my company? You don’t have to announce this to your team, which you shouldn’t. You want to make sure that you’re keeping this in house.
And then what happens is, when you have everything lined up, and this is one of the reasons I wrote Exit Ratio 360. This is one of the reasons why I wrote my book. Was to make sure that people have some sort of guidelines and be able to say, Hey, am I ready to take this business to the next level? Am I able to sell it? So sometimes it’s worth the wait to pause.
Next, if you have a good M and A advisor, if you have a good consultant, they’re going to be able to tell you, hey, it’s a good launch window, because the multiples change over time. The highest they ever were was just before covid, the lowest they ever were just after covid. And then they climbed back up, and then they went back down. They go with interest rates. They go with what private equity is interested in. And sometimes what happens is, when an industry is hot, the industry is hot, so you got to take it. So if you wait, you can lose part of that multiple from when the industry was hot.
So I’m going to share an example with you. I know of a guy that had a company that he was able to sell way up at the freaking top. Had he sold that today, he would have gotten 90% of what he originally sold for. He got a massive payout. But had he waited, he wouldn’t have had that opportunity to sell what he was.
So you’re okay, Scott, what are the bare minimum requirements for me to prepare to exit my business? One, you have to have that identity to say that you’re going to do it. You want to say, hey, I’m going to sell my business. Next, you want to plan. You want to be five years, four years, three years, two years out, so that you can track the multiple, so that you can plan the multiples, so that you can say, hey, this is what I want to do. I have my research done, or my Selling To Titans thesis ready to go, and then be ready when the time is ready.
And so here’s what it’s going to take. Standard operating procedures. Your team’s going to have to have everything dialed in so that when somebody comes in and buys, they know what the job descriptions are as well, and everything’s defined with decision rights.
And so here’s one of the tests that I like to give. Can you take vacation for a month without your phone going off, without getting emails, without being interrupted? That is one of the first signs that, hey, everything’s going to be okay. And you can have this conversation when you’re talking to your prospective buyer, whether it’s private equity, strategic buyer, private investor, you can have the conversation and say, hey, there’s been times where I’ve left for an entire month and didn’t have to take a phone call. Those things are like music to our ears. We want to hear that.
So your role, your responsibility when selling a company comes down to some of the timing, and some of it’s mental prep, some of it’s business prep, some of it’s financial prep, and then some of it is just timing the market. There’s a reef out here in Moorea, and it’s about half a mile out. So if you wanted to go surf and time the waves, your shoulders would be sore. There’s timing involved in surfing. There’s timing involved in going into an intersection, they got roundabouts here. There’s timing involved in taking off on an airplane. There’s timing involved in exiting your business. And you do want to be aware of that.
It’s a mistake to think that you’re going to sell in three or six months. If you haven’t prepared, you’ll get a lower multiple. You’re not going to get that A plus deal. You’re not going to get an A deal. You’re not going to get a B deal. You’ll probably get a C or a D. And D stands for don’t do it.
If you want to know what French Polynesia Moorea looks like, I got out here before anybody got on the beach because I prepared. What a beautiful day.
You got one of three things to do from here. One, find the subscribe button, click on it. Two, every time I send out a video, you’ll get an update, hit follow. Three, share this. Bell to friend. We’ll see you soon. Thanks for watching.