Selling a business is not a decision made in a single moment. It often begins with a shift in how founders think about their company’s future. Sometimes, the shift is subtle; other times, it’s unmistakable.
This inflection point is what we at L40° call the consideration stage: when founders begin to explore the possibility of a sale from a position of strength.
Recognizing this moment early is a strategic advantage. It allows founders to frame M&A as a deliberate and structured pathway toward liquidity, scale, or legacy, depending on what the next chapter demands.
Every founder reaches a moment where the energy that once powered relentless growth begins to turn inward. The shift is rarely about performance alone; it’s about perspective.
For many, it begins with questions about dilution, especially after successive funding rounds. Others encounter execution fatigue when the complexity of scaling a business begins to outpace the thrill of building it. And for some, the business hits a strategic plateau: product-market fit is proven, growth is stable, but the next leap forward is less clear.
Contrary to what some may think, this mindset change doesn’t signal failure. It can actually reflect maturity. A founder who begins to think beyond endless growth is beginning to lead with strategic clarity.
While every company is different, there are certain indicators or metrics that point to a favorable window for exploring a business valuation and eventually, perhaps, a sale.
Here are four of the most significant signals that indicate it could be time to start thinking about an exit strategy.
Timing is important. That’s the first thing to keep in mind. While this doesn’t necessarily mean that it is everything, it can materially shape valuation and leverage.
Just like the broader economy and stock market, M&A activity in many sectors tends to move in cycles, both macro and micro. For example, valuation multiples tend to rise when capital is cheap, growth stories are favored, or strategic acquirers face pressure to deploy cash. Similarly, a surge in public market comps can drive up private valuations in tandem.
Nevertheless, timing is also about recognizing risk. Waiting too long in an overheated market can backfire. When valuations peak, so does competition. Founders who sell during a strong but rational market window often preserve more value than those who chase the last dollar.
So how can you gauge whether market momentum is right — both for your industry and the broader economy? It takes deep research, proprietary data, and real-time market intel, the kind of insight an experienced, active M&A advisor like L40º is built to provide.
Recommended: How Tariffs Impact SaaS: The Borderless Edge in Tech M&A, by L40º Managing Director and serial founder, Juan Ignacio Garcia Braschi.
Unsolicited outreach might be more than just a compliment. It may be the market telling you something about your business's worth. Or it could also be an indicator of dry power and a slight pinch of desperation seeking to fill in quotas
When credible buyers reach out it’s often a sign your business is on the radar for players focused on platform acquisitions or strategic integrations. The key is to distinguish serious interest from opportunism because not every suitor is prepared to transact at full value, and engaging on the wrong conversations can do more harm than good
This is where advisory matters. The moment an offer materializes or a known consolidator engages, it’s critical to assess whether there’s an opportunity to run a structured, competitive process. A sell-side M&A advisor can surface other potential buyers, manage discretion, and maximize leverage, rather than allowing a single inbound approach to define the outcome. It’s this combination of competitive tension and strategic guidance that often raises the stakes, and hence, the final valuation.
In sectors undergoing consolidation, remaining independent can quickly become a strategic liability.
As competitors are acquired and scaled within larger ecosystems, the economics of competition shift. Consolidated players benefit from broader distribution, pricing leverage, deeper capital reserves, and operational efficiencies that standalone companies struggle to match.
For many business owners, this creates a strategic crossroads: continue independently and raise external capital to keep pace, or consider a sale to a larger acquirer with the scale to accelerate growth.
This decision often depends on capital needs. To remain competitive, the business may require significant investment in product, go-to-market, or international expansion. That capital typically comes at a cost, whether in the form of dilution from venture funding or increased operational risk and an impact in the balance sheet. In contrast, a well-timed strategic exit can allow a company to thrive under the umbrella of a scaled player, while allowing founders to de-risk, de-invest and still participate in continued growth.
Being a first mover in a consolidation cycle can also unlock premium outcomes. Early entrants are often viewed as cornerstone assets, particularly when their capabilities or customer base help anchor a buyer’s platform thesis. By contrast, founders who wait too long may face a narrower buyer set, lower urgency from acquirers, and increasingly price-sensitive negotiations.
Even if external signals are favorable, internal dynamics often shape sale timing. Readiness isn’t just operational, it is psychological and interpersonal. A well-timed sale aligns external opportunity with internal clarity, and sometimes, it’s that gut feeling founders know better than anyone: the offer that makes your eyes light up, or a moment that simply feels like a rite of passage.
Key questions to consider include:
That said, while it’s essential to reflect on whether you feel ready and excited to sell your business, the broader macro context matters just as much. Ideally, the decision should be grounded in both objective market dynamics and your own personal motivations, all in service of the business’s long-term success.
These questions don’t just shape if you sell, but how you lead the process and what kind of outcome you aim for. For example, if you’re still energized by running the company but recognize that the market is consolidating, and you'd prefer to avoid further dilution or simply de-risk a bit, a strategic exit with some rollover equity might be the best of both worlds.
That’s exactly where an advisor adds value: helping you explore the options and align them with what matters most to you.
Just as there are strong signals to consider a sale, there are equally important red flags.
Selling in response to reactive interest, without preparation or strategy, often leads to suboptimal terms. Similarly, being seduced by a single unsolicited offer without testing the market or exploring competitive alternatives can leave value on the table.
Other warning signs include:
In these cases, the better path may be to pause, improve readiness, and engage a trusted advisor to assess timing.
Read: Why does NRR in SaaS matter?
Before you commit to a process or even to hiring an advisor ask yourself:
These questions shouldn’t be tackled alone. A reliable advisor can assist in modeling potential scenarios, assessing the right timing, and preparing so you’re ready when the opportunity comes.
If you're asking the question, “Is now the time?", you’re already in the consideration stage. That’s the right moment to begin a conversation.
At L40°, we work with founders to evaluate timing, strategic fit, and readiness well before a deal is in play. We help you understand the landscape, assess interest, and preserve optionality, all with discretion and resolve.
You don’t have to commit to a sale. You just have to ask the right questions before the market does. Let’s talk.
