Why the best entrepreneurs tend to sell too late
A few years ago, I sat down with the majority shareholder of an adtech company that was generating double-digit EBITDA (in the millions of euros). Their gross margins were exceptional—of the kind that make you think, “this can’t be real.” For me, it was clear: without any doubt, it was a once-in-a-lifetime moment. It was the right time to sell.
I tried to explain the market context, the multiples being paid at the time, and what could be achieved through a well-run process, taking advantage of such an extraordinary window.
“Joshua, I’ll only sell now if I get an outrageous price. It’s not the time to sell.”
Three years later, the company was no longer growing. Gross margins had normalised (exceptional things don’t last forever). EBITDA was a third of what it had been at its peak. The adtech market, which had moved from being at the centre of buyer interest to the margins, made any sale process even more difficult.
Optimism and greed are two of the best qualities an entrepreneur can have (and I’m not being ironic). It is extremely difficult to build a company if you spend your time thinking about everything that can go wrong, the risks, and the downside scenarios. Great entrepreneurs have an almost irrational ability to believe things will work out, even when the data suggests otherwise. It’s what allows them to keep going when any reasonable person would have already given up.
Greed, understood as always wanting more (more profit, more market share, more company value), is what pushes them not to settle. To keep investing when they could be distributing dividends. To enter new markets when the current one is already doing well. To maximise the value of their company—and for their family. A communist might disagree with this, of course, but I doubt many of them are reading an M&A newsletter.
The problem is not optimism or greed. The problem is applying those two virtues at the wrong time.
When an entrepreneur is considering a sale and I ask why they haven’t started the process yet, the answer is usually a variation of the same idea:
“It’s just that next year I’ll make another million, and at 8x EBITDA that’s €8 million more in valuation.”
“We’re launching a new version that’s going to be amazing.”
“I have a couple of potential deals in the pipeline that, if we close them…”
These reasons are, of course, legitimate—and sometimes even true. The problem is that they never disappear. The following year brings new, equally valid reasons. And the year after that, new ones again. The optimist always sees future growth; the greedy always wants to extract a bit more before selling.
The combination makes the entrepreneur wait, and wait, and wait. Until the numbers change, and what was once a sale from a position of strength becomes a sale from a position of necessity—or, in some cases, no sale at all.
Timing the exact peak value of your company is essentially impossible. No one has that information in advance.
But there is something worse than missing the peak: starting to sell right at the peak, because by the time the process finishes, you’ve already left it behind.
A properly executed mid-market sale in Spain easily takes twelve months. From signing a mandate with an advisor, preparing materials, going to market, receiving offers, negotiating the LOI, going through due diligence, signing the SPA, and finally receiving the funds—assuming no complications, no buyer pull-outs, and no stalled processes.
So if you start the process at the peak, you will most likely close when you’ve already been in decline for months. And buyers, it’s worth remembering, don’t just look at last year’s numbers. They look at current trading and run-rate.
You often need to start one or even two years before your best moment. That’s hard to estimate—but there are signals that help.
A buyer does not pay for this year’s EBITDA. They pay for a business plan for the next three to four years that must be both credible and achievable. And that plan is only credible if the recent trajectory supports it.
If your last few years show +30%, +20%, +10%, and this year you are flat or declining, no one can seriously defend a plan showing +20% in 2027 and +25% in 2028. The recent data contradicts it. Buyers see it, understand it, and discount it.
Market data confirms this. According to the KeyBanc Capital Markets & Sapphire Ventures Private SaaS Survey 2025, large private SaaS companies growing above 50% have reached up to 14x ARR. Those growing between 20% and 40% achieve 5x–7x. Those below 10% growth or flat trade at 3x–4x—if they find a buyer at all.
Wait too long, and multiples compress quickly.
2024 — 20% growth
EBITDA: €3M · Multiple: 8x · Valuation: €24M
2026 — stagnation
EBITDA: €4M · Multiple: 4x · Valuation: €16M
(These are illustrative, but directionally consistent with market data.)
EBITDA goes up, but the multiple collapses. Total valuation drops significantly. The entrepreneur who “waited because next year would be better” gained €1M in EBITDA and lost €8M in valuation.
You don’t need to time the exact peak. There are signals that tell you you’re close—or already there:
In sectors like tech, software, digital media, IT services, and tech-enabled businesses, change has always been fast. But in recent years, AI and globalisation have accelerated everything.
Software multiples are a clear example. According to Aventis Advisors, the public SaaS index peaked at a median of 18.6x sales in 2021. By 2024 it had fallen to 2.9x—a drop of more than 80% in under three years.
Companies that sold at the peak captured extraordinary valuations. Those that waited often sold (if they could) at a fraction of that value, even if their businesses were still growing.
What used to take five years to become obsolete now can take 18 months. The window is shrinking.
After two years of declining revenue and profit, the pool of willing buyers shrinks dramatically. Serious buyers—private equity, strategics, consolidators—want growth. They want momentum.
If numbers are falling, only opportunistic buyers remain. And they are not paying for what you built—they are pricing in distress.
The most common objection to selling is: “What if next year is much better? I’ll be leaving money on the table.”
The answer is earnouts.
An earnout allows you to sell at today’s value while retaining upside if the business continues to grow. If you’re right, you capture additional value later. If not, you still sold at the right time.
Crucially, earnouts are negotiated from strength—not from weakness.
Timing the perfect moment is impossible. Nobody sells at the exact peak. But when everything is going well—when buyers are inbound, margins are high, and the market is paying attention—that may already be the signal.
Not to celebrate. But to start the process.
Unless you have a very strong, concrete reason to believe your company will be significantly more valuable in two or three years, waiting is rarely the right answer.
Time, in this case, is not on your side
By Joshua Novick, partner at Bondo Advisors
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