Timing the Exit: How Founders Know When It’s Time to Sell

When is the best time to sell your business? In this episode, Evergreen M&A Senior Advisor Hannah Huke sits down with Evergreen Partner Robert Radlich and Managing Director Dr. Azza Kennedy to unpack one of the most common — and costly — questions founders face: exit timing.

They discuss when business owners should start thinking about selling, why the best exits often happen while a company is still growing, and how early preparation creates leverage, optionality, and negotiating power. You’ll learn how private equity buyers evaluate timing, why waiting for “one more year” can backfire, and how getting advice early helps founders protect value, reduce risk, and control their outcome — whether a sale happens now or years down the road.

If you’re a founder considering a future exit, navigating private equity interest, or simply want to understand how to sell from a position of strength, this episode breaks down what smart timing really looks like.

Real founders. Real exits. Real lessons from the journey. Brought to you by Evergreen M&A: Advisory for Founders.

Transcript

Hannah Huke 0:03

Hello and welcome to the Founder's Journey to Exit, a podcast brought to you by Evergreen M&A Advisory for Founders. Today we're talking about a very important topic that we get asked all the time. When is the right time to sell my business? Also, should I sell now or should I wait? Today I'm joined by our managing director, Dr. Azza Kennedy, as well as our founder and partner, Robert Radlich. Welcome guys!

Dr. Azza Kennedy 0:37

Thank you!

Hannah Huke 0:39

Okay, so as I said, when is the right time to sell? This is the question that we get asked. Should I wait? Should I go to market? When should I do it? Can I time the market? We're going to be running through all of these questions today and give you our, our advice! So Azza, you've worked with a lot of founders. You were one yourself and, can you speak to your experience about, you know, why, why so many wait too long? Or they, they wanna keep waiting? 

Dr. Azza Kennedy 1:16

Yes! As a founder and a, a business owner, because we always think, oh, one more good year will change everything. We say, let me just grow revenue a little more. Fix this one thing or hit that next milestone. But while you are waiting, the market can shift. Valuation can cool and energies start to run low. So most founders don't realize the best time to sell isn't at when you are tired, it's when things are going exceptionally well.

Hannah Huke 1:52

Yes. And Robert, what can you lend to that? I know you have a lot of experience in this. Talking to business owners who say, you know, should I wait, or let me wait, or let me, let me get that second location open, let me hire that doctor, and, what usually happens?

Robert Radlich 2:12

I got a lot of stories for this, but I mean, the best time to sell your business is when someone wants to buy it, right? When there's a lot of buyer activity out there that's very, you know, kind of market dependent. So if you're getting a lot of inbounds and maybe you weren't thinking about selling, it's always a good idea to kind of explore what's out there and potential, you know, different offers and, and deal structures and kind of to what Azza said, like so many entrepreneurs we've talked to are like, Hey, you know, we're going so fast now. We're continuing to grow. I wanna keep growing. I wanna do X, Y, Z. Do one or two more things. Follow up a year later, didn't do those one or two more things. Now the business is declining. It's worth less. The market has shifted, you know, there's a lot of people that may have missed, you know, a really good opportunity for not timing it correctly. And it's, this is always gonna be the hardest part of, of a transaction is really, you know, timing the market correctly to get the highest value. But again, the best time to, to sell your business is when someone wants to buy it. And you can always explore those offers that come through and ultimately you don't have to transact. But kind of keeping your eye on the market as things evolve is super critical. And we always say it's like, you might not be ready to sell today, but you can still have the conversations with us to one, make sure you have the right advisors around you. Two, understand what your business is worth today. And hey, if you want to continue to grow it, you know, build a team and do those initiatives, you know, what could it be worth tomorrow and, and what's that buyer universe look like? 

Hannah Huke 3:37

Yeah. I think it's so important to get that help as early as possible, even if you're, two, three years down the line, having a conversation and, we're always happy to talk, just to see how you can start getting yourself set up, start getting the right advisors in place. Or you might really be surprised at current market valuations and you may realize that yes, now is a really great time for me to go to market. So…

Robert Radlich 4:11

And I'll hop in with another example too, because this is something the, the private equity guys and, I kind of sit on both sides of the table also, as a buyer and business owner as well. We'll go buy a business, the next day we're prob, well we, before we even buy the business, we're talking to an investment banker, you know, in three to five years, who am I selling this to and what do I gotta do? So we're in constant contact, probably quarterly basis with different investment banks related to the companies we own as we look to eventually position that for sale. So you as an owner, an entrepreneur, should really be thinking about it the same way. 

Hannah Huke 4:42

Yes, exactly. So, Azza, what does readiness really look like? And there's many different sides of this. There's the financial aspect, the emotional aspect for yourself, your ties to the business, and then there's the strategic aspect.

Dr. Azza Kennedy 5:07

Yes, as I mentioned that in the last episode is, like the financial a, aspect with what number are you looking for, uh, the emotional, are you still energized and at peak and you're not burned out? Strategically, can your business run without you? So it can be transferrable and because, uh, buyers pay premium for stability and momentum. So when the business is performing well, you have so much leverage, you can actually choose your buyer ne, negotiate better terms, and even keep equity for what's called like, uh, the, the second bite of the apple. Selling from strength always beats selling from a fatigue.

Hannah Huke 5:52

Mm-hmm. 

Dr. Azza Kennedy 5:53

So that's so important, differentiation in here.

Hannah Huke 5:55

Yes. Not only is the best time to sell when you have buyers, but the best time to sell is when things are going well, because…

Dr. Azza Kennedy 6:06

A hundred percent.

Hannah Huke 6:07

…we talked about it in a previous episode, you really want to be coming from a place of calm and confidence, and that's usually not when the, the business is slowing down. You, you want it to be a time when the business is, is going really well and sales are up, and, and things are booming and, and growing. So, you mentioned the second bite.

Dr. Azza Kennedy 6:33

Yes.

Hannah Huke 6:34

And Robert, I'm gonna kick this one over to you 'cause you're really great at explaining things very simply and direct. So tell us, tell us what the second bite means.

Robert Radlich 6:48

Yeah, and I think more broadly, kind of looking at deal structures, so you have your EBITDA, you have a multiple that kind of determines the total value or what we call like enterprise value of your business. Now, the deal structure can be broken up many different ways, so you're gonna get some cash at close. There could be an earnout, which is typically, you know, based upon either revenue or EBITDA growth. So you could get more cash, you know, in year 1, 2, 3, post close, depending how that's structured. There could be a seller note. Where you're receiving interest payments, you're kind of financing the acquisition for the buyer. And then one of the most powerful things, you know, that, that buyers use to incentivize owners post close is rolled equity. So you'll take a portion of your pur, purchase price and either still own, you know, a portion of your business, depending how the, the transaction's structured, or you know, if it's, for example, a multi-site roll up and they have 50 sites, you could own a portion of, basically all the sites are the HoldCo, right? And, and what that is, is you're gonna have direct equity in the business still. So when they continue to grow it over time, the value of your equity is gonna continue to increase. And we've seen, you know, if you get an early with a, you know, a buyer, that that can go 2, 3, 4, 5, 6 times its value and can sometimes be even worth more than kind of your initial, you know, cash at close. So, in terms of that, it's kind of, what is the buyer buying? You know, how much is your equity worth in the platform? And then when are they potentially looking to sell or recapitalize the business? You know, and what's that worth in the future? And it can be very significant. 

Dr. Azza Kennedy 8:23

I agree with Robert, and that's how, really, founders can also create long-term wealth, not just from just selling the initial business, but their second bite. But it only works if you sell while your business still has gas in the tank. So that's, that's pretty important. So the right time to sell is always when you and your business are both strong and not running outta fume, and there's so much potential from being with a bigger platform.

Robert Radlich 8:52

Yeah, and I think one thing to emphasize too is all equity's not created equal. There's multiple…

Dr. Azza Kennedy 8:57

A hundred percent. 

Robert Radlich 8:58

…There's common equity. There's preferred equity. Preferred equity with pick. So again, having an advisor, I'd say both as a M&A advisor and a lawyer who understand the different structures and how that work. ‘Cause some equity's good, some equity's not. We would want to ensure that you're getting, you know, the best type of equity possible in the deal. And that's again why we like to run a competitive process where you have multiple offers. 'Cause people just do it differently and we'll find the, the best equity structure if there is a real equity component in the deal, you know, that aligns best with your goals for long-term wealth creation.

Dr. Azza Kennedy 9:32

And this is where Evergreen M&A, you know, will really guide you through this process and help you out, figure, like, help you figure out what equity model will fit your business in your strategy. 

Hannah Huke 9:45

Yes. And then the last thing I wanna touch on is, after the sale, and what your role might look like and your timeline after the sale, which, gone are the days where you kind of just sell and you get your cash and you walk away. A lot of the buyers that we work with, they will want you to stay on for a transitionary period. And, you know, I would love to hear both of your perspectives on that and what sellers and owners need to keep in mind when they're thinking about their timeline and when the one is the right time. 

Robert Radlich 10:29

Yeah, I can jump in and hit that. I mean, it, it differs on the type of business, but I would say generally, you know, as, again, as an investor myself, like the longer, typically the better. We like to see, you know, the owner stay on just because, you know, their team is typically very tied into them. They've been, you know, driving the growth of the business historically. So we'd like to see them stay on from, you know, call, two to five years, there can be shorter transitions. Again, depending on the, the type of the business. And maybe I'll use a, a veterinary clinic as an example, like the owner's a vet and is still producing. So you can't just like, go away. Versus a manufacturing company where, you know, you might have a president in place who's overseeing the day-to-day, you come to the office a couple hours, there's more likelihood there, you know, where you could, where you could go in and operations don't kind of cease to exist after, or you know, decline after, so it really depends.

Hannah Huke 11:22

Yep. 

Robert Radlich 11:23

But again, the rule of thumb is usually longer, the longer the better, especially in provider-based businesses.

Hannah Huke 11:28

Okay, so thank you both for joining us today. I think we have some really great insights for our listeners and for business owners on the right time to sell and some really great practical tips for them to consider. And if you have questions about, when the right time is for you, we are happy to walk you through where you're at in your business growth and where you wanna go and what your goals are. And happy to talk anytime. Please feel free to visit our website at evergreenforfounders.com and reach out and get in touch. We're always happy to have a conversation no matter where you are at in your journey. So thank you so much and we'll talk to you soon.