How to Know When to Sell

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Most business owners measure exit readiness by a single number: the sale price. After selling two home care agencies and interviewing 18 other owners who have walked this path, I’ve learned that money is actually the easiest part. True readiness rests on a three-legged stool: your finances, your emotions, and the buyer you choose. If you miss one of those legs, you aren’t just leaving money on the table, you’re risking your future peace of mind. Here is what I wish I’d known before my first sale.

My wife asked me, half joking, “What’s your number?”

This was 2021. Jim Kimzey, a fellow owner I trusted and admired, had just sold his business, Tender Rose, and offered to introduce me to the team that bought it. I was not looking to sell. I was 60, I still enjoyed owning Craig Cares, and neither of my sons wanted the business, so “someday” was as far as my thinking had gone.

So, I blurted out a number I was certain was too big. Then I gave it to the potential buyer. They said yes.

I should have been thrilled. Instead, I spent the next several weeks waking up at 3AM with my stomach churning and my mind racing. I had my number and it turned out that it was the easy part.

I have now sold two home care agencies. Craig Cares, which I founded in 2002 and sold in 2021. Then in 2024 I stepped in to run Homecare California after the owner, my closest friend in the industry, passed away. I sold it in 2025. I also interviewed 18 other owners who have sold because I wanted to know whether what I experienced was normal. It was.

Experience is a tough teacher. You take the test, and then you get the lesson. What follows is an attempt to teach the lesson before the test and a long, honest answer to the question I get asked most: how do you know when you are ready?

Three Kinds of Ready

Readiness has three legs: your finances, your emotions, and your buyer. Most owners measure the first one carefully and assume the other two will sort themselves out. They do not.

The owners I know who are happiest a year after closing got all three right. The ones carrying real regret almost always missed one of the last two, and it was rarely the money that disappointed them.

There is also a fourth question underneath all of this, which is whether the business itself is ready. I will come back to that, because if your honest answer to “am I ready?” is “not yet,” the work you do in the meantime is what determines what you eventually get offered.

Leg One: Your Finances

Start here because it is the only leg with arithmetic.

The calculation my wife and I ran

We had not kept a personal budget in years. Once Craig Cares was producing more than we needed month to month, we stopped tracking it. That only worked because we are both financially careful and we never let our lifestyle climb as fast as the business income did.

So rather than build a budget from scratch, we looked backward. We pulled what we had spent over the previous three years, and it was remarkably consistent year to year. We took that average, added 25% for health insurance and cushion, and called it our post-sale budget.

Then we took the offer on the table, added it to our existing investments, and ran the whole thing through Vanguard’s planning tools to see whether it would cover that budget for the rest of our expected lives. The answer was yes. That is how we knew we were financially ready. Not a feeling. A calculation you can do in an afternoon.

The math that surprised me

Here is what that calculation will not tell you. Purely on the numbers, if your business is stable or growing, keeping it is usually the better financial outcome. It is worth understanding why before you decide.

Say your agency throws off $100,000 in owner benefit and sells at 4.5 times earnings, roughly the midpoint of the 3 to 6 range home care agencies tend to fetch, which would be $450,000. Living in California, expect something in the neighborhood of $150,000 to go to taxes. Get a real estimate from your CPA before you plan around any of this, not a rule of thumb. That leaves you $300,000 to invest. If you put that $300,000 into income-producing investments—real estate, dividend stocks, or municipal bonds—at a 6% return, you will earn $18,000 a year. That is a steep drop from the $100,000 the business was paying you.

That gap is not a mistake, and it is not a bad deal. Your investment income is safe, stable, and asks nothing of you. My wife and I call it mailbox money. The buyer paying $450,000 for $100,000 of income is earning a 22% return, and they earn it by taking on the oversight and the risk you have been carrying for years.

What the math leaves out entirely is the peace of mind of taking your chips off the table. You all know the weight you carry. You have also seen the down years. A low-risk return that requires no attention from you will always be a smaller number. Only you can decide what the difference is worth.

Know your number, and know your alternative

One owner I interviewed put it in terms I have not been able to improve on. To get the best price, you must know your BATNA — your best alternative to a negotiated agreement. He turned down an offer because he knew he could continue to grow his company if the deal died, and he ended up with 40% higher offer.

That is only possible if you have decided in advance what walking away looks like. If the honest answer is that you have no alternative and you need this deal, you will negotiate like it, and the other side will know.

What you are actually being offered

The headline price is not everything. Before you can judge whether an offer makes you financially ready, you need to know how much of it is real money on closing day and how much is contingent on things that have not happened yet. Decide in advance where you land on each of these:

• Cash at close versus everything else.
• Earn-out — a bonus if the business hits financial targets after the sale. Performance often dips post-close, which is how earn-outs end in disappointment.
• Rollover equity — you keep some portion of your ownership, say 20%, in the buying company. A second bite of the apple, and also a second helping of risk.
• Seller financing — effectively lending the buyer part of your own sale price.
• Holdback — typically around 10% of the price, released after 12 months if the buyer makes no claim against the representations you made.
• Your role post-sale — how big, if any.

One detail I did not expect, and I was delighted to learn, was that I kept the accounts receivable and the cash in the bank at close when I sold Craig Cares. That felt like a bonus on top of the purchase price. It is negotiable rather than automatic, so ask early and get the answer in writing.

Leg Two: Your Emotions

I do not have a clean calculation for this one. I do have questions that have held up across my own two sales and 18 conversations with owners who have been through it.

Is your answer a clear yes?

Not “probably.” Not “if the price is right.” If you have strong mixed feelings going in, the process will find them. Due diligence alone will test a committed seller, and it will break an ambivalent one. The most satisfied sellers I have talked to sold when they were ready, not when the market was ready for them.

Can you tell burnout from readiness?

They feel identical from the inside and they are not the same thing. One owner described what she was carrying as compassion fatigue in a 24/7 business, and that is a different problem from wanting to be done.

Take an extended absence — one to three months. When you return, you will either feel refreshed or dread walking into the office. Either way you have your answer, and it is a far cheaper way to find out than signing a purchase agreement.

Will this decision be easier in five years?

My daughter-in-law asked me this when I was agonizing over the Craig Cares sale. I sat with it and realized it would not be. Then I asked myself a harder version of the same question. If I knew I had five years left to live, what would I do? Sell. That was the moment the decision stopped being a spreadsheet problem.

For what it is worth, I made about 50 entries in my journal during that stretch. I would recommend the same to anyone in the middle of this. You are going to have the same argument with yourself many times, and it helps to see what you thought last week.

It is lonelier and harder than you expect

You cannot tell your team. You often cannot tell your closest colleagues. Meanwhile you are running the business and selling the business at the same time. One owner aptly described it as holding down two full-time jobs at once. Both of my sales landed in the middle of everything else life was doing.

During the Craig Cares sale, I was calling caregivers one by one to get their paperwork signed from a hotel room in Eugene, Oregon, where we were watching our future daughter-in-law compete in the Olympic Track & Field trials. During the Homecare California sale, I was at my mother’s bedside in Chico when she passed on January 4th; the sale closed on January 6th. Life goes on.

The exit paradox

There is a Harvard Business Review headline that stuck with me, “Congrats on selling your business. Now get ready to be depressed.”

You reach a goal that very few people ever reach, and it is not unusual to feel a significant letdown. One survey found that 67% of people who were initially elated about their exit later reported significant identity challenges. One owner I interviewed said it plainly: “It messed with my identity. I was known as the home care guy. Now what?”

Almost nobody in your life will be able to relate. To most people, mixed feelings about never having to work again sounds absurd, and I want to be clear that being in this situation is a privilege. But the feeling is real, it is close to universal among people who have sold, and it is temporary. Give yourself some grace.

This is the single best argument for spending time with owners who have already sold. They are the only people who will not think you are being ridiculous.

Leg Three: Your Buyer

If you take one thing from this, take this one.

Legal contracts are critical, but they will not protect you the way trust will. Nearly every owner I interviewed said some version of that. Do real research on the buyer. Ask for references from people they have bought from or worked with, then actually call them. Spend unhurried time with the buyer before you are under any pressure. One owner told me to insist on meeting the investors behind the buyer and to treat that as non-negotiable. Listen to your gut.

I chose a buyer for Homecare California largely on trust and, after weeks of video calls, they walked away from their offer, saying our profit margin was too high to be sustainable at their scale. We went back to our second choice and got it done, but there was a stretch where it felt like we were about to lose the deal entirely, and I dreaded the idea of starting over. Over one crazy five-day rollercoaster, it came together. My broker and attorney assured me that something always goes wrong during a business sale. Bottom line, you must be able to trust the buyer.

Here is why this leg carries more weight than owners expect. Several weeks before closing you will hand over your client and caregiver information. That takes real trust. About four weeks out you will tell your team, your caregivers, and your families. As a seller, you are committed to the sale. However, after that announcement, a buyer who wants out can still find a reason to leave or lower the price. If your weekly sales dip too much before closing, most agreements allow the buyer to renegotiate or walk away. I ran sales reports during that window and prayed. I have heard of one buyer walking away the weekend before a Monday close.

That risk is not really managed in the purchase agreement. It is managed by who you choose. It bears repeating, you must be able to trust your buyer.

If the Answer Is “Not Yet”

Most owners reading this will conclude they are not ready today. That is a useful answer, because it tells you what to do next. Here’s what I recommend.

Pull yourself out of the day-to-day

This is the highest-value recommendation, and it pays off three separate ways. The business becomes more sustainable for you personally as you step away from the daily caregiver and client churn. Your company gets room to grow because you are finally working on higher-value things. And it becomes worth more, because a buyer is not buying a job that only you can do.

If you are wondering how, read Traction by Gino Wickman and actually follow the steps. If you hired an MBA to make your company more valuable, there is a good chance that is the book they would reach for. One owner I interviewed, after reading Traction, hired a COO, put phantom stock in place to incentivize the leadership team, and built KPIs so the business ran without him. He was very happy with his outcome.

Buyers discount a business where the owner still runs operations, owns the key referral relationships, handles hiring and firing, or is the top salesperson. What they pay up for is professional management, low client concentration, a proven sales strategy, and growth.

Be honest about growth versus margin

I was just as careful about expenses in my business as my wife and I are in our personal life, and I made decisions based on what grew profit rather than what grew revenue. That instinct is not wrong, but it is incomplete.

Consider two agencies. Company A makes $2.5M in revenue at a 20% margin, so $500,000 of profit. Company B makes $5M at a 10% margin, also $500,000 of profit. Same profit, but a buyer will usually pay more for Company B. They think they can lift a 10% margin, where they worry that a 20% margin has further to fall. Company B is more likely to have a hands-off owner and is probably growing faster.

Growth generally costs you margin in the short run, because it takes investment in sales and marketing. It is usually worth it.

Get your house and your advisors in order

Every owner I interviewed who was happy with their outcome said some version of the same thing. Have clean, meticulous financials, and advisors who have actually sold businesses, not your general business attorney, and a CPA who can calculate your tax bill before you agree to anything. And if you can find one, a mentor who has sold a company and will take your calls at 10pm.

Build a data room before anyone asks for it. Audit your financials. Know your accounts receivable, your referral sources, your marketing spend and what it returns, and your caregiver recruiting and retention numbers. All of it will be requested eventually and assembling it under a 30-day exclusivity clock is miserable.

Regarding brokers, I have done it both ways. I sold Craig Cares without one, because I already had a buyer I trusted. For Homecare California we used a broker, and having someone with hundreds of potential buyers on a list produced multiple letters of intent and gave us real negotiating leverage. If you already have a credible buyer, you may not need one. If you do not, a broker will usually improve your close rate and your terms. Either way, you still need the attorney and the CPA and either way the emotional work remains yours.

What the Process Will Actually Feel Like

Here is a short map of the process, because once you know what actually happens, readiness stops being a feeling and becomes something you can measure yourself against.

If you use a broker, they send a blind teaser to prospective buyers, describing your industry, revenue range, EBITDA range, and ideally your growth story without identifying you. With your help they prepare a Confidential Information Memorandum, a high-level description of the business designed to generate interest. After a buyer signs an NDA, they get the CIM, then come the inquiry emails, video calls, and three years of P&Ls and balance sheets to anyone still serious.

The ball sits in the buyer’s court for a few weeks. They come back with more questions, or they walk, or they send a letter of intent. The LOI is a high-level non-binding offer covering price, cash at close, seller financing, earn-outs, rollover, and holdbacks, plus an exclusivity window of typically 30 to 60 days during which you cannot talk to other buyers.

The purchase agreement follows, and it is much longer, much more complicated, and legally binding. This is where an experienced transaction attorney earns their fee. Not by fighting every line, but by telling you which handful of terms will actually matter to you years from now and letting the rest go. Mine flagged my non-compete, and we got it reduced from five years to three. It was the only change we got, and it turned out to be one that mattered.

Then comes due diligence, which one owner accurately called a financial colonoscopy. My request list ran over 500 items. I remember opening it and feeling completely overwhelmed, and when I opened the one for Homecare California, having already been through it once, I felt exactly the same way. How do you eat an elephant? One bite at a time. Send each item over as you finish it rather than saving them up, because watching the list shrink reassures you as much as it reassures the buyer. And you do not have to be perfect. Tell the buyer why an item is hard, and they may decide they do not need it.

You will not be finished at close. There are vendor contracts to cancel or transfer, prepaid expenses to reconcile, receivables to collect. I ended up reconciling a full year of VA billing. I took 38 boxes of Craig Cares documents to the shredder this year, five years after the sale. I am fairly confident that was the last step.

The Part Nobody Plans For

You may feel poor. You have never had this much money, yet you will feel poor anyway, because your business generated income and someone just switched it off. Spending money from an investment account feels nothing like spending from cash flow.

Deciding what to do with the proceeds is genuinely a job. My wife and I chose income over growth. We could not buy back the same income Craig Cares produced, but we could buy enough to fund our life. Take your time with this. One owner I interviewed spent a full year studying before he invested a dollar, and I think that was smart.

Then there is the time. Here is what I did: no alarm clock, a leisurely second cup of coffee every morning, plenty of exercise, a library card and 23 books read that first year, road trips, fishing, golf.

If you are like me, it will not be enough. One former owner called the thing I was missing “action.” I like to feel productive. I found myself enjoying yard work because something got finished. My business brain never switched off. I joined the finance committee of a large homeowners’ association, met interesting people, but found it unfulfilling because running a nonprofit is not how I think. What I eventually realized is that business owners are my people.

That is roughly when I was asked to run Homecare California. After three years away I was surprised how fast it came back and how much I enjoyed it. I had no interest in a long-term full-time role, but I was glad to invest and to advise. One owner told me he is not retiring, he is rewiring. That is about right.

Plan for this in advance, and I do not mean the money. Think about what will replace what the business gave you, because there will be a void and it is easier to fill if you see it coming. One owner recommended the book Transitions by William Bridges.

Your ownership of this business ends at some point. If no one in your family is taking it over, it ends when you sell, when you close the doors, or when you are gone. Given that list, preparing the business for an eventual sale is just good stewardship, whether or not you ever pull the trigger.

Selling is one of the most consequential things that will happen to you, and most owners do it exactly once. That is a hard way to learn anything. So, find owners who have already done it and ask for advice. In the end, the decision is yours and I know it’s hard. Tennis legend Billie Jean King said, “Pressure is a privilege” — so is the opportunity to sell your business.

I am always glad to compare notes and help a fellow owner. You are my people.

Craig Falk