I recently had a discussion with a cybersecurity company’s founder who mentioned that the board only thinks about a potential M&A process when they’re “in the mood,” signaling that selling is often treated as a backup plan when growth slows or liquidity pressures arise. However, the best moment to consider selling usually comes when things are going exceptionally well—when revenue is growing, customer retention is strong, and market momentum is high. This is when strategic buyers tend to offer the best valuations since they prefer acquiring winning businesses.
Another sign to start thinking about sale options is when the founder begins to lose energy or shifts focus, though this doesn’t necessarily mean a sale—sometimes a leadership transition or a partial liquidity event suits better. Also, when multiple buyers show interest, it’s valuable intel that the company may be strategically well-positioned, even if formal selling isn’t immediately planned.
Typically, boards only seriously consider selling when the company faces challenges like slowing growth or cash constraints, but at this point, valuations often reflect struggles, and shareholders may receive less favorable offers. Instead, these moments might be better for a strategic reboot like pivoting or leadership changes to regain momentum.
Boards should actively avoid inertia by continuously evaluating whether selling, scaling, pivoting, or remaining independent will best create shareholder value. Ideally, these conversations happen proactively—not out of urgency or crisis.
Itay Sagie advises tech companies and boards on strategy and M&A, emphasizing the importance of timing and strategy in maximizing company value.
