The Right Time to Seek an Investor: A Question of Preparation, Not Timing
Entrepreneurs who face a succession dilemma or who simply don’t want to force the next generation into a future in which the risks and demands are much larger than before often ask me, “When is the right time to start looking for an investor?” It’s a question that reveals a fundamental misunderstanding about the investment process. The truth is that there is no perfect moment—no magical alignment of stars that signals it’s time to begin. Although some transactions look as if everything was planned perfectly, in most of these cases if you look into it, it is more about coincidence than careful timing.
The “right time” isn’t about timing at all; it’s about timely preparation, managing the process, and having realistic expectations.
The Timing Myth
Many business owners operate under the illusion that they can pinpoint the optimal moment to sell their shares —perhaps when results or revenues are stable or even better when they point upward, when a new product launch was successful, or when overall market conditions seem favorable. But this thinking is flawed for one simple reason: neither owners nor potential investors can truly know when that ideal moment arrives. Yes, looking back in hindsight might demonstrate that the timing was good, but did you really know in advance?
Markets fluctuate. Investor priorities shift. Politics might change. New technologies appear. Clients switch their strategies. Your business evolves. Attempting to time the investment market is as futile as trying to time the stock market. What matters far more is having your house in order before opening the door to potential suitors.
Preparation Trumps Timing
Instead of obsessing over when to begin the process, focus on being prepared when you do. This means:
- Having clean financial records – At minimum, three years of financial statements that tell a coherent story about your business. And be ready to explain any extraordinary effects that you would want to adjust your results for.
- Business Plan – Prepare a professional business plan; this is not only about the P&L including the assumptions that went into this plan, but also the balance sheet and the cash flow statement. Of course you would want to have an integrated business plan, evaluate various scenarios and be prepared to discuss upside potentials also!
- Documenting operational processes – Investors want to see that your business can function without your constant involvement.
- Understanding your market position – Be ready to articulate your competitive advantages with supporting data.
- Developing a clear growth strategy – Show where additional capital will take the business, which drivers could be set, what potential lies ahead and how it creates additional value.
- Building a strong management team – Demonstrate that talent exists beyond the founder, that the team will remain steady and that the new owner can build on strong shoulders that are there to stay on.
These elements take time to establish. The businesses that struggle most with finding investors or do not get the valuation that they expect are often those that rush into the process without these fundamentals in place.
The Reality of Timeframes
One of the most dangerous misconceptions about finding investors is the timeframe. I’ve seen countless business owners assume they can wrap up the entire process in just a couple of months. This assumption is also driven by unprofessional advisors who claim unrealistic scenarios just to get a mandate. Specifically in the SME sector business owners are not serial investors, they do not have the experience and therefore easily fall prey to wishful thinking.
Even when everything is perfectly prepared and you find an interested investor quickly, the process typically takes 6-9 months from initial conversations to having funds in your account. This timeline includes:
- Initial prospecting and outreach (1-2 months)
- Preliminary meetings and discussions (1-2 months)
- Due diligence process (2-3 months)
- Negotiation of terms (1 month minimum)
- Legal documentation and closing (1-2 months)
And this assumes everything goes smoothly. Complications—which are the norm, not the exception — will extend this timeline significantly.
The Psychological Journey
Beyond the practical preparations, there’s an emotional aspect that many entrepreneurs underestimate: preparing yourself to let go. Whether you’re selling a minority stake or your entire business, bringing in investors means surrendering some control.
This psychological adjustment doesn’t happen overnight. It requires honest self-reflection about:
- Your willingness to accept input from others
- Your ability to compromise on vision and strategy
- Your readiness to be accountable to stakeholders
- Your comfort with potential rejection and criticism
The emotional preparation often takes longer than the practical preparation. Start this process early by having candid conversations with other entrepreneurs who have gone through similar transitions and listening to professional advisors with experience in your sector and references that you can trust.
Conclusion: Process Over Timing
The right time to seek an investor isn’t about external factors—it’s about when you’ve completed the necessary groundwork. This includes financial preparation, operational readiness, market positioning, strategic planning, team building, and emotional preparation.
Accept that finding the right investor is not a sprint. The process will likely take 6-9 months even under ideal circumstances. Rushing it or setting unrealistic timeframes only leads to frustration, suboptimal deals, or failed transactions.
The entrepreneurs who succeed in attracting quality investments are those who understand that preparation and process matter far more than timing. They start getting ready long before they need capital or want to transfer the ownership into new hands. They approach the entire journey with patience and also seek professional advice early on, as external support will enable them to discuss this mostly once-in-a-lifetime-process with someone who has experienced this multiple times.
So when is the right time to start looking for an investor? When you’re fully prepared for the journey ahead—not just financially and operationally, but also emotionally and psychologically. And that’s a timeline only you can determine.
At CDI Global, we are leveraging a unique combination of industry expertise, 51-year experience in cross-border mid-market transactions and local presence in more than 35 countries. This enables us to offer full support to our clients throughout any M&A process, including tailor-made preparation services to support entrepreneurs in this key and often critical phase.
By Roman Pongracz, Partner – CDI Global Austria
