Robert Herjavec, the seasoned investor from “Shark Tank,” knows a thing or two about building and selling companies. Having sold multiple businesses himself, Herjavec offers valuable insights for entrepreneurs wrestling with the difficult decision of when to part ways with their ventures.
Many business owners struggle to identify the right moment to sell. It’s often an emotional journey filled with second-guessing and uncertainty. “The biggest challenge entrepreneurs face is knowing when the time is right,” Herjavec explained during a recent business conference. This hesitation is natural – after pouring years of sweat and tears into building something, letting go isn’t simple.
According to Herjavec, there are three compelling reasons that signal it might be time to sell your business. First, when you receive an offer that’s too good to refuse. Second, when you’ve hit a growth ceiling and need more resources. Third, when you’ve lost the passion that once drove you.
When that unexpected lucrative offer comes knocking, it deserves serious consideration. Herjavec sold his first cybersecurity company, BRAK Systems, to AT&T Canada in 2000 for a reported $30 million. “Sometimes the market timing and valuation align perfectly, creating an opportunity you simply can’t walk away from,” Herjavec told Inc. Magazine. These moments often come unexpectedly, requiring quick but careful evaluation.
Recent market data supports this approach. A 2023 BizBuySell Insight Report revealed that businesses sold for an average of 2.6 times their annual cash flow last year. This multiple can increase substantially for companies with unique technology, strong growth, or strategic value to specific buyers. Timing can dramatically impact valuation – a lesson Herjavec learned firsthand.
The second reason to consider selling emerges when you’ve hit a growth ceiling. Many successful small businesses reach a point where further expansion requires resources beyond their reach. “You might need significant capital, specialized talent, or distribution channels that only a larger organization can provide,” Herjavec notes. At this juncture, selling to a company with these resources can propel your business to heights otherwise unattainable.
This growth limitation affects businesses across industries. The U.S. Chamber of Commerce reports that 45% of small businesses cite lack of capital as their biggest barrier to growth. When Herjavec sold his second company, The Herjavec Group, he recognized this reality. “We’d reached a point where global expansion required resources we simply didn’t have,” he explained.
Perhaps the most personal reason to sell comes when your passion fades. Entrepreneurship demands tremendous energy and commitment. When the fire dims, performance typically follows. “If you’re no longer excited to go to work, if you’re not thinking about the business in the shower, it may be time to let someone else take the reins,” Herjavec advised during a recent podcast interview.
Burnout among entrepreneurs is real and widespread. A Harvard Business Review study found that 45% of entrepreneurs report feeling burned out. This exhaustion directly impacts business performance, innovation, and team morale. Recognizing this decline in enthusiasm can be difficult but crucial for both personal well-being and business success.
Timing a business sale also requires market awareness. The Federal Reserve Bank of New York notes that business valuation multiples fluctuate significantly based on interest rates, industry trends, and overall economic conditions. Savvy entrepreneurs monitor these factors when considering an exit.
Herjavec emphasizes preparation regardless of your reason for selling. “The best deals happen when you’re prepared but not desperate,” he cautions. This preparation includes clean financial records, documented processes, strong management teams, and a clear growth strategy that new owners can implement.
Practical steps for preparation include conducting a professional business valuation, addressing any legal or operational issues, and consulting with financial advisors who specialize in business transactions. The
