Capittal's view: when to sell a company and when to wait

Quick answer

Capittal's view is that the best moment to sell a company is not when the owner is tired, but when the business can demonstrate growth, defensible margins, low dependence on the founder and active buyers in its sector. Selling makes sense when the company combines recurring results, solid financial information and a credible growth story. The criterion does not depend on the calendar year: it depends on whether your company can be explained, compared and defended in front of several buyers at once.

What signals inside my own business say the moment has come?

The signals that decide sit inside the company, not in the headlines. There are four and they are read together.

• A sustained EBITDA track record. Not one exceptional year, but several years pointing the same way. An isolated peak forces you to argue that the figure is the new normal, and that is an argument the buyer wins.
• Dependence on the owner already reduced. The main customers know somebody else in the business, pricing follows a written policy, and decisions do not stall when you are away for two weeks.
• A management team that runs the company without you. Somebody on your team presents the business, answers questions on margins and holds a meeting with the buyer without you stepping in. That is worth multiple.
• Recurring contracts. Contracted revenue, documented renewals and a spread of customers. Recurrence is what turns a forecast into a reasonable expectation.

When those four signals hold at the same time, the moment has arrived, even if the year is not the best of the cycle.

What does a buyer actually ask?

A buyer does not only ask what the company turns over. They want to know whether the EBITDA is recurring, whether the team can operate without the owner, whether the customers will stay after closing and whether the price can be defended in due diligence.

Signal	Capittal's reading	Recommended action
Growing EBITDA	A good starting point	Prepare the valuation and the teaser
Founder dependence	Reduces the multiple	Strengthen the management team
Concentrated customers	Increases risk	Document contracts and recurrence
Weak reporting	Holds back offers	Tidy the information before going to market

What signals say I should wait, and what do I fix while waiting?

It is worth waiting if the EBITDA is distorted, if a significant customer has just been lost, if there is no reliable monthly data, or if the owner still does not know whether to sell outright, sell a stake or look for a partner.

Waiting only works if the wait has work in it. These are the tasks that move price.

• Tidy the reporting. A monthly close, margins by business line, and an EBITDA figure that does not change depending on who calculates it.
• Separate personal from operating costs. Expenses, property, vehicles and family salaries either out of the profit and loss account or explained one by one.
• Reduce customer concentration. Winning new customers counts for more than raising the margin on the largest one.
• Put a manager between you and the operation. It is the slowest task and the one that most changes the risk the buyer perceives.
• Close off contingencies. Employment, tax, planning or corporate: what is resolved beforehand is not deducted afterwards.

What happens if I wait without fixing anything?

Waiting without fixing anything does not preserve value: it adds another year to the track record. If next year looks like the last one, the buyer gains one more data point showing the business is flat and none showing it can grow.

Passive waiting is not free either. Succession becomes more urgent, the owner is a year older, and the sector may have consolidated without you, leaving fewer buyers free to compete for your company. A wait that works has a date and deliverables; one that does not is a decision not to decide.

How much weight does the market cycle carry, and how much my personal situation?

The market for buying and selling companies does not move on interest rates or macroeconomic headlines alone. In smaller companies and the mid-market, very specific factors carry the weight: buyer liquidity, sector appetite, access to financing and the availability of quality assets. When a sector is fragmented and there are buyers with consolidation plans, a prepared seller has more scope to create competition.

The other half of the decision has nothing to do with the market and is almost never written down.

• Age and energy. A process demands months of availability and usually brings a stay-on afterwards. Better to start it with energy than without.
• Fatigue. Selling out of exhaustion shows in the negotiation and reduces your ability to say no.
• Family succession. If there is a successor who wants the business and can run it, selling is an option. If there is none, selling is a deadline.
• Shareholders on different timetables. The one who wants out now and the one who wants five more years must agree before a buyer is called, not during due diligence.

So the question is not only whether this is a good year to sell, but whether your company is saleable in this particular year and whether you are in a position to carry the process.

If my timing and the market's do not coincide, which one wins?

They almost never coincide. The market has its cycle and the owner has their own, and waiting for the two to align means waiting indefinitely.

Preparation wins. A prepared company finds buyers even in a cautious market. An unprepared company wastes the best cycle, because it cannot prove what it claims. The cycle moves the number of interested parties and a point or two of multiple; preparation decides whether there is a competitive process or a single offer.

The practical order is this: first decide whether the company is ready, then choose the window within the next twelve months. Never the other way round.

How is this decided in practice?

Situation	Likely decision	Reason
Strong results and a natural buyer identified	Start preparing	There is a story and a market
Good results but weak reporting	Prepare for three to six months	The information may cap the offers
A temporary drop in EBITDA	Wait, or explain it very well	The buyer will discount the risk
Family succession blocked	Explore alternatives	A partial sale or a partner may work

An example shows why the same figure is worth different amounts. Two companies each turn over 12 million euros and generate 1.8 million of EBITDA. The first has recurring contracts, a professional managing director, monthly reporting and no customer above 12% of revenue. The second depends on the founder, has 35% concentrated in one customer and mixes personal costs into the accounts. With identical EBITDA, the first attracts more buyers and a better multiple. The difference is not only financial: it is perceived risk.

What can be prepared in twelve months?

Twelve months will not reinvent the business, but it will change the conversation. This is the work that fits into that period.

• Months 1 to 3. A valuation with a low, base and high range. EBITDA adjustments justified one by one. Net debt, cash and working capital calculated on a defensible basis.
• Months 3 to 6. Reliable monthly reporting, contracts signed and organised, and contingencies identified through your own due diligence diagnostic.
• Months 6 to 9. An equity story that explains why to buy now. Real delegation of part of the customer relationships to the management team.
• Months 9 to 12. A map of trade, financial and international buyers. Tax analysis of the transaction. A process timetable designed to avoid premature exclusivity.

The difference between going to market and going to market prepared can be several points of multiple. It is also the difference between negotiating with one buyer and negotiating with several.

What is the next step?

Capittal's view is that selling well requires anticipation. The best process does not begin when an unsolicited offer arrives, but when the owner decides to prepare the company so that several buyers can understand it, compare it and compete for it.

Before speaking to any buyer, write down three things: what proportion of the company you want to sell, what you need to receive at closing, and how long you are willing to stay on afterwards. Once those are settled, a professional valuation and a risk diagnostic will tell you whether the moment is now or twelve months away.

At Capittal Transacciones we prepare that confidential valuation for owners who are considering a sale and do not know whether the moment is now. We are a mid-market M&A boutique handling transactions in the approximate range of 3 to 250 million euros, with eight offices in Spain (Barcelona as head office, Madrid, Girona, Lleida, Tarragona, Palma, Zaragoza and Valencia), and we are part of the NRRO group. The partner handles every mandate personally, including the conversation about whether to sell now or wait.

Keep reading

• Guide: every decision you face when selling your company
• A weak final year: sell or wait
• A valuation is not the sale price

Decide when to sell with data: talk to Capittal