Timing the Market vs. Timing Your Business

If you run a business or plan on buying or selling one, you’ve probably wondered whether it’s best to focus on “timing the market” or “timing your business.” It’s a question that comes up often in mergers and acquisitions (M&A) circles, and for good reason: The stakes can be high. On one hand, some people argue that you should pounce during a hot market when stock prices, valuations, and investor confidence soar.

On the other hand, it’s just as important—if not more so—to ensure your organization is internally ready so that even when deal opportunities arise, you can make the most of them. Below are some considerations to keep in mind when weighing market timing against business timing in M&A.

What Does “Timing the Market” Really Mean?

When people talk about “timing the market,” they’re referring to attempting to buy low and sell high. In the context of M&A, timing the market might mean selling your business at a point when multiples for similar deals are skyrocketing. Alternatively, it could mean acquiring a company during a period of market uncertainty if you’re convinced prices are temporarily suppressed.

But there’s a catch: Accurately forecasting market highs and lows can be as elusive for private companies as it is for public equities. Plenty of factors—like changes to interest rates, recessions, or even consumer hype around certain industries—can come together to influence when valuations rise or dip. Additionally, M&A deals usually take months to negotiate, meaning perfect timing is tough to nail down. The market can shift while you’re still performing due diligence.

Why “Timing Your Business” Might Matter More

“Timing your business” is about getting your internal house in order first. That might mean stabilizing cash flow, developing reliable management teams, and clarifying future growth strategies. Investors typically want to see a company with a solid track record, clean financial statements, and strong operational frameworks. If your business is missing these fundamentals, chasing an upswing in the market can backfire.

Buyers, for instance, will look under the hood during their due diligence process. If they discover shaky finances or leadership disputes, it can scare them off—even if the broader market is waving a green flag for acquisitions. Beyond that, many sellers want a legacy of stability. They’d rather hand off the company when it’s running smoothly, not when it’s in disarray.

The Emotional Aspect of Market Timing

It’s tempting to rely on headlines that proclaim “Now is the time to buy!” or “These are the peak valuations we’ll see for a decade!” But big statements like these can play on emotions more than facts. And emotion is rarely your best friend when it comes to major business decisions. Some deals do close during so-called “peak valuation” periods, yielding impressive paydays. 

But chasing an unpredictable top can turn into an endless waiting game. If your business is already aligned for growth, or if you’ve found a target acquisition that aligns with your strategic vision, it can be riskier to stall for an ideal market scenario that may or may not materialize. As many experienced dealmakers will tell you: The only perfect time to sell or buy is the time that’s truly right for your objectives.

The High-Stakes Nature of M&A

Because M&A deals often have long negotiation windows, timing can become an even trickier beast. Negotiations, financing, due diligence, and regulatory approvals can take months or even longer. By the time a deal is ready to close, the market might have changed. Relying too heavily on economic cycles alone can leave you scrambling if projections fail to pan out.

That’s where the readiness of your business—clear financials, no skeletons in the closet, a capable team—makes a genuine difference. While market conditions ebb and flow, a strong business proposition stands firm. Potential buyers who see resilience and longevity are often willing to stick it out, even if the wider market looks challenging at the moment.

Using Market Trends Wisely

Of course, it’s not all or nothing. Paying attention to broader market trends offers valuable insight. For example, if there’s a surge in acquisitions in your sector—perhaps driven by new tech or changing consumer habits—your company might garner a higher valuation sooner than you expected. Being aware of these waves can help you position your business so that you’re ready to capture those benefits.

Likewise, understanding market conditions can help buyers spot attractive deals. If you’re aiming to grow your portfolio, it could be beneficial to actively search industries that are momentarily underappreciated—where you see long-term potential but others don’t.

The Cost of Waiting Too Long

Sometimes, you can wait too long for that perfect “seller’s market.” If you keep hoping for valuations to climb forever, you might miss a window when interested buyers are still around. As the saying goes, “market peaks are only visible in hindsight.” If your business is hitting all the right operational metrics, waiting for an extra half-turn on valuation averages can end up costing you if the market makes a sudden dip.

On the flip side, if you’re a buyer waiting for the market to bottom out, you might find yourself missing out on strategic acquisitions that could catapult your company into the future. The best targets don’t typically remain off-limits forever—someone else might scoop them up if you hold off indefinitely.

Building Your Team for M&A

Regardless of what the market is doing, consider building a reliable team of advisors before you plunge into M&A waters. This could include:

• An accountant or financial advisor specializing in mergers and acquisitions.
• A corporate attorney with M&A expertise.
• A banker or deal advisor who can help structure financing (if you’re buying) or help you get the best terms (if you’re selling).
• A dedicated internal team that knows the ins and outs of your business—from marketing to operations.

When your business is internally ready, you have far more flexibility in how you respond to market conditions. You can proceed swiftly when an opportunity arises, or wait for a more strategic opening without fear of losing momentum.

Balancing Strategy and Flexibility

The goal is to strike a balance between paying attention to external forces (interest rates, market sentiment, comparable deal multiples) and internal readiness (clean financials, strong leadership, a unified vision). Sometimes, market conditions do give you an extra nudge in deciding to sell.

Other times, you might recognize that your business is on the cusp of a major breakthrough—maybe expanding into a new market niche or launching a game-changing product—making you more attractive to buyers down the line. In other words, you’re orchestrating two timelines: the macro (market) and the micro (your own business). Your success often hinges on aligning both, or at least ensuring they don’t clash when you’re ready to take action.

Case Study: A Mid-Sized Tech Company

Imagine a mid-sized tech firm that’s developed a promising software platform. The broader market experiences a tech-stock rally, and M&A valuations in their sector begin to soar. The founders could rush to sell at a premium, hoping the wave endures. However, behind the scenes, the company’s profitability metrics still need fine-tuning, and the product suite is only halfway to full commercial viability.

If the founders seize this apparent “perfect timing” in the market without shoring up the platform, potential buyers might uncover hidden risks in due diligence, demand a lower price, or walk away. Even if a deal closes, the terms may not be as favorable, and integration challenges could loom since the product isn’t fully fleshed out. This scenario highlights how focusing on business readiness can be just as crucial—sometimes more so—than external hype.

When Both Timelines Align

The true sweet spot is when your organization is ready for a sale, and the market aligns favorably. Your clean financials, strong leadership, and clearly mapped-out growth plan become even more enticing amid enthusiastic market conditions. For “very prepared” businesses, an upcycle in the market can supercharge your valuation and position you for a successful exit on your own terms.

For buyers, having your financing prearranged and your management team prepped to handle new acquisitions means you can leap on opportunities when competitor valuations dip or when a well-suited target company becomes available. By maintaining a longer-term focus on your strategic goals, you’re able to move swiftly and decisively in any market climate.