When is the correct time to sell your company? Many entrepreneurs and CEOs struggle with this question. A blueprint unfortunately does not exist. Below are signposts we have observed primarily across Application Software, FinTech, InsurTech, Information Services, IT Services and Technology-Enabled Services.
The company participates in a mature end market and continued growth is dependent upon successfully entering new markets where you lack domain expertise. Acquisitions could be the answer. They are a great strategic lever for acquiring domain expertise and scale. However, in the absence of such opportunities perhaps it would be better to sell.
Continued growth and competitive positioning requires a major technology rewrite. Perhaps the company can’t afford a rewrite or doesn’t have the resources to properly execute a major technology overhaul. It may be best to sell to a larger strategic acquirer where the required investment would have a negligible financial impact.
The company’s technology has lost its competitive edge, sales activity reflects this and as CEO you have little confidence in the company’s ability to innovate. A company’s inability to innovate is due to a culture that does not properly value or reward innovation. Culture can be changed but it takes significant time. Acquisitions could be the answer but your company may not have acquisition experience – particularly as it relates to post-close integration – or the institutional will to execute an M&A strategy. Therefore a sale is likely the best option.