You’ve built something real. Revenue is up, your team is humming, and your customers are locked in. But then… headlines start to shift. Inflation rises. Interest rates follow. Capital markets tighten. Whispered warnings of a coming recession turn into front-page forecasts.
What now?
Do you hit the gas and take your company to market — or bunker down and wait for better weather?
At Legacy Advisors, we get this question all the time. Founders want to know whether selling before a downturn is a smart strategic move — or a panicked exit that leaves money on the table.
The answer?
It depends on how you prepare.
In this article, I’ll walk you through:
- Why buyers behave differently before a recession
- What signals you need to read — in your business and the market
- The advantages (and risks) of pre-recession exits
- How to use buyer psychology, timing, and positioning to your advantage
This isn’t theory — this is exactly what we help our clients navigate at Legacy Advisors.
The Timing Dilemma
When economic clouds start forming, the natural founder instinct is to wait it out.
But here’s the reality:
- Recessions don’t happen overnight
- Buyers don’t disappear overnight either
- But valuations and terms can shift very quickly
By the time it’s officially declared a recession, the best buyers may already be on the sidelines — or offering structured deals that protect their downside.
So the window you have before a downturn can be incredibly valuable — if you know how to use it.
What Buyers Are Thinking Before a Recession
Buyers aren’t just looking at your business — they’re watching the macro environment. Their mindset becomes more cautious, but it’s not shut down (yet).
Their questions become:
- “Will this business hold up if we enter a downturn?”
- “Can we finance the deal with less risk?”
- “Is now the last chance to acquire this company at a fair price?”
- “Can we still raise debt or equity to support the transaction?”
If your business checks the boxes — clean financials, margin strength, predictable revenue, low customer churn — you become a safe haven investment.
And when uncertainty is rising, safe havens are incredibly attractive.
Kris’s Playbook: Lessons from the Pepperjam Exit
In The Entrepreneur’s Exit Playbook (link), Kris Jones talks about his exit from Pepperjam. It happened just before the 2008 financial crash.
“We were watching the signs. Capital was still flowing, but you could feel things tightening. We didn’t panic — we executed with urgency.”
That timing allowed Kris to close with GSI Commerce before the recession hit full force — and secure a deal that may not have been possible just a few quarters later.
The lesson? You don’t have to panic. But you can’t be passive.
Five Questions to Ask Yourself Before Selling
- How resilient is my business model in a downturn?
Do you have recurring revenue, diverse clients, and capital-light operations? - What’s happening in the M&A market right now?
Are deals still closing? Are buyers still active in your sector? - What shape is your financial story in?
Are your books clean, your forecast credible, your EBITDA margin healthy? - Do I need this exit now — or do I want it?
Are you trying to get out of pain… or capitalize on momentum? - Do I have the leverage to run a competitive process?
If you went to market today, would multiple buyers take the call?
If your answers are strong, you may be in the perfect position to sell — even if the cycle is shifting.
The Strategic Case for Selling Pre-Recession
1. You’re Selling While There’s Still Buyer Demand
Pre-recession deals can still attract strong interest. Buyers who are sitting on capital want to place it before risk premiums rise.
2. You Can Dictate Terms — Before the Buyer Does
Once the market turns, buyers gain leverage. They’ll ask for lower valuations, more contingencies, or longer diligence periods. Selling early means you’re not negotiating from a place of weakness.
3. You May Outperform Sector Peers Who Wait
If your competitors freeze, and you close a solid deal, you exit with momentum — and they’re left explaining their declining numbers a year later.
4. You Can De-Risk Future Uncertainty
Founders often don’t realize how much personal financial risk they’re carrying. Selling early gives you liquidity, peace of mind, and strategic options.
But There Are Risks
Let’s be real — selling too early has drawbacks.
- You might leave money on the table if the recession never comes
- You could miss future growth opportunities
- Buyers may lowball you under the guise of “preparing for macro risk”
That’s why how you prepare matters more than when you go to market.
How to Prepare Your Business to Sell Pre-Recession
1. Tighten Your Forecasting
Buyers will want to know how your business will perform under stress. Prepare a recession scenario in your model — show them you’ve thought ahead.
2. Highlight Resilience Metrics
Focus on:
- Revenue retention
- Customer diversification
- Low churn rates
- Strong unit economics
- Positive cash flow
Paint a picture of a company built for durability, not just velocity.
3. Clean Up Your Cap Table and Balance Sheet
If you’ve got messy equity or debt, clean it now. Recession-era buyers will penalize complexity.
4. Pre-Empt Buyer Objections
Before they ask, answer:
- “What happens if your top customer churns?”
- “How will inflation impact your cost structure?”
- “How exposed are you to interest rate hikes?”
Control the narrative by surfacing the risk — and showing your plan to mitigate it.
5. Tell the Right Story
Don’t make the pitch about fear. Make it about opportunity:
“We’ve built a resilient business. We’re profitable. We’re ready for whatever the market does next. Now is the time to partner with a buyer who sees the future.”
Buyers don’t want desperation. They want clarity.
Legacy Advisors Podcast Insight
On the Legacy Advisors Podcast (link), we’ve had multiple founders share stories of pre-recession exits.
A common thread?
“I didn’t try to time the market. I tried to prepare my business so that whenever the window opened — or closed — I was ready.”
Preparation is your power.
When to Delay
There are a few conditions under which we might advise a founder to wait instead of selling early:
- You’re in the middle of a product transition
- Your leadership team is not ready for buyer scrutiny
- You lack clean financials or need a QofE scrub
- Your sector is white-hot, and deal activity is still accelerating
In these cases, use the next 6–12 months to optimize, prepare, and then re-enter with a tighter story.
Final Thoughts
Preparing to sell before a recession isn’t a risk or an opportunity.
It’s both.
But the founders who win are the ones who embrace strategic urgency — not fear.
They ask:
- What do I need to prove to be buyer-ready?
- What’s the story I want to tell before the market shifts?
- How do I make this exit a decision, not a reaction?
If you can answer those questions with confidence, you don’t have to time the market perfectly.
You just have to be positioned when it matters.
And when the headlines shift and buyers start hesitating — they’ll look for the business that already saw it coming.
That business… could be yours.
Frequently Asked Questions About Preparing to Sell Before a Recession: Risk or Opportunity
Is it smart to try selling before a recession hits, or is that bad timing?
It depends on the condition of your business and the dynamics of your industry. If your company has strong financials, clean books, durable revenue streams, and low customer churn, then pre-recession may be the ideal time to sell — while buyers still have dry powder and valuations haven’t fully contracted. As Ed Button, Jr. often explains to founders at Legacy Advisors, the pre-recession window is about leverage. It’s your opportunity to shape the deal before buyer psychology becomes defensive. Waiting may mean missing your chance or entering a buyer’s market with weaker terms and higher risk of deal delays.
How do buyers behave differently right before a recession?
Buyers become more cautious and risk-aware. While many still want to deploy capital, they become more selective and more reliant on diligence to justify the investment. They’ll scrutinize your forecast, evaluate your resilience to economic downturns, and often seek structural protection like earnouts or escrow. That doesn’t mean deals won’t happen — but it does mean the burden is on you, the founder, to demonstrate confidence and clarity. If you come to market prepared with strong narratives and defensible numbers, you’ll be viewed as a safe asset in an uncertain time — which increases your appeal.
What are the biggest mistakes founders make when trying to sell before a recession?
The top mistake is waiting too long, hoping to squeeze out a few more months of growth. By the time a recession is “official,” the buyer pool has usually shrunk, and you’re left with less leverage. Another mistake is failing to prepare for buyer questions related to risk: “What if your top customer churns?” or “How will a downturn affect your cash flow?” If you haven’t stress-tested your model or answered those objections in your materials, buyers will assume you’re not ready. At Legacy Advisors, we work with founders to front-load those answers and make the exit process smoother — even when the market gets bumpy.
What kind of businesses are still attractive to buyers as the economy slows?
Buyers look for companies that show durability, cash flow strength, and predictable performance. Examples include:
- Recurring revenue businesses (especially SaaS or subscription-based)
- Companies with diversified customer bases
- Market leaders in niche verticals
- Asset-light service businesses with low overhead
- Brands with pricing power and margin resilience
The more your business resembles a resilient system, the more likely you are to attract premium offers, even when M&A markets tighten. Strategic acquirers may also want to act quickly to get ahead of the downturn and gain competitive advantage.
Should I adjust my valuation expectations if I sell before a recession?
Yes — and no. If your business fundamentals are excellent and your narrative is strong, you can still command a solid valuation. However, be prepared for buyers to offer more structured deals — with contingencies, earnouts, or staggered payouts. That doesn’t mean you’re being lowballed — it means buyers are protecting their downside as uncertainty increases. As Ed says in the Legacy Advisors Podcast, the founders who stay flexible and strategic — instead of rigid and reactive — often end up with the best outcomes, even when the deal structure isn’t 100% cash at close.