Ready to sell your business? Take the no-contact vacation test first

Sarah* was tired when she came to us. The owner of a healthcare company based in Melbourne, she had spent the better part of a decade building her business. Now she was looking for a way to step away. She was overworked and, frankly, burned out.

This is where we meet many owners. They come to us when they are at a point of depletion. They need a break. A long vacation, if you will.

Ironically, before selling one’s company, a vacation is sometimes exactly what the doctor ordered.

Just not the way you’d think.

The No-Contact Vacation Test

One of the key factors influencing the odds that you can successfully sell your company at a good valuation is whether or not you are still involved in the daily operations of the business.

For the most part, and as we discuss in the One Year in Advance Exit Playbook, a buyer is going to want as frictionless an acquisition as possible. This means they will ask how much your presence is still required to operate and grow the company. All else equal, the less involved you are and the better the team underneath you, the lower the risk that value walks out the door with you when you leave.

Enter the no-contact vacation test.

The idea is simple: if you can go away on vacation for a few weeks and your business will not fall apart, then you are more ready to be acquired.

If, instead, things start breaking, well… that is useful signal too. You will discover where the dependencies are while you have time to fix them.

Don’t check in

Now, emphasis here is on the “no contact” part.

Taking a vacation while answering emails every morning, approving payments from the beach, fielding calls from employees and stepping in whenever something goes wrong is not much of a test. The point of the exercise is to find out what happens when you are genuinely unavailable.

Can your team make decisions without you? Do customers know who to call? Can someone else approve spending, deal with a difficult employee or respond when an important client has a problem? Does the sales pipeline continue to move? Can the business get through an unexpected problem without waiting for you to solve it?

These are exactly the kinds of questions a buyer will eventually ask. These are the kinds of tasks employees need the empowerment to handle.

A vacation can expose the answers surprisingly quickly.

Last thoughts

Of course, you don’t actually have to go on vacation to sell your company. This is simply one way to reveal dependencies you might not even know exist, and one way to get your team ready. Just ask yourself honestly: if you feel deeply uncomfortable with the idea of stepping away, why is that?

The answer to that question is probably revealing.

Ultimately, we see this a worthy test for you and your team. Going through this process can help reveal dependencies, it may better empower employees, and it can even show a buyer that your team is ready to handle a transition. We say there is limited harm in trying it out.

If you are like the vast majority of entrepreneurs we work with, you could also honestly use a break.