42, thinking about selling my business at what might be peak valuations. What am I missing?
Quick background: I’m 42, married, 3 kids, and my wife doesn’t earn income.
Numbers:
- Business is worth somewhere between $7M and $12M depending on how long I stick around
- $1.5M in liquid investments
- $1.2M equity in our house (owe $370k at 2.75%, so not touching that)
- About $750k equity in my commercial building. The business is in it now. It’s a small building and would probably only rent for around $3k/month, so I don’t see a reason to keep it if I sell.
- Income is around $800k/yr
- We spend about $20k/month and are saving a lot
Why I’m thinking about selling: valuations in my industry have never been higher and I don’t know how long that lasts. We’re also pretty exposed to AI. It’s educated white-collar work that could get automated. Short term I think AI actually helps us, because we’ll need fewer support staff and EBITDA goes up. But the next 10 years honestly scare me.
The other part is my heart isn’t really in it anymore. What I loved was the growth and waking up every day having to fight to survive. Then it got easy, and I’m just not wired to coast and be happy with it.
So I’m leaning toward drawing a hard line at $10M. I think I can get there if I stay on 3 years with a salary. Add in selling the building and I’d end up (post tax/commercial building sale) with about $8.5M invested plus around $700k in my 401k.
What am I not thinking about? I know every extra year I work and then sell at this multiple adds about $400k to the pile. But if valuations drop, it’ll be too late, and I’ll be in my 50s running a lifestyle business fighting off AI and new competition.
*I used claude to reword my drivel and I'm happy to verify for the mods if needed.