Common Questions about Selling Your Business
You likely have many questions about selling your business. We are happy to provide these FAQs for your consideration.
Selling a business in Canada can be tricky. Access to capital is limited, tax issues can be complicated, and there are fewer buyers due to our smaller population.
Why Hire a Business Broker?
To achieve success, hire the best business broker you can find. They will add value, streamline the process, source capital for buyers, maintain confidentiality, reduce your headaches and risk, and save you time.
Download Our Free Guide
We recommend you download the book Insider Tips on Selling a Business in Canada for more detailed information.
How to Exit a Business in Canada
There are many ways to exit a business in Canada. In the past, transferring a business to the next generation was common, but now owners often want to maximize business value for supporting their retirement. Here are some options:
- Transferring to Family: This is less common now as many in the next generation do not have the skills, experience, or passion for the business.
- Transferring to Staff: This carries risks as staff typically do not have the funds to purchase, and securing funding is difficult. If the transaction fails, it can harm the business.
- Selling Assets: Selling off assets (inventory, equipment, client relationships, and property) generally does not result in maximum value and does not provide a legacy.
- Selling to a Third Party: This could be an individual with the necessary resources, a private equity firm, a strategic buyer, or a financial buyer. A good business broker can add value and help achieve your goals.
To answer this question, contact your local Sunbelt Business Brokers office. They provide a free, confidential consultation to help you determine this. Sunbelt typically works with businesses ranging in value from $250,000 to millions.
If your business is sellable, Sunbelt can sell it. Sunbelt Business Brokers sell more businesses than anyone else. They have the marketing programs, experience, and processes to achieve sales on terms that work for both parties.
Many factors affect the value of a business, including maintainable revenue and profits, future potential, systems and processes, loyal staff, technology, location, history, client loyalty, and more. Sunbelt is very experienced at valuing businesses and has access to the best resources and technology. For an accurate valuation, have Sunbelt do a business valuation for you.
Call your local Sunbelt office at (613) 731-9140 or email [email protected]. Our friendly, professional, and experienced business brokers are happy to assist you.
The best time to sell your business is when the market is ready, the business is ready, and you are ready. Your Sunbelt Business Broker can help you assess readiness in each of these areas.
Begin as early as possible, preferably at least three years before you plan to sell. Some tax planning strategies take two years to be effective, and value enhancement strategies can take even longer. Consult with a Sunbelt Business Broker for advice and guidance.
We recommend keeping your plans confidential to avoid making staff nervous and preventing competitors from taking advantage. Only your accountant, lawyer, and business broker should know.
Sunbelt has a pool of international, Canadian, and local business buyers. Many buyers have signed confidentiality agreements and provided financial information, making it likely that we can find someone looking to buy a business like yours.
You can do much to prepare your business for sale and increase its value. Read our comprehensive guide on selling a business for more information. It is available for free download from the Sunbelt Canada website.
There are many pitfalls in selling a business. Over the past 20 years, Sunbelt has developed a proven methodology that works. Use it to avoid mistakes and achieve a win/win transaction.
Yes, Sunbelt extensively qualifies buyers, starting with a confidentiality agreement and a thorough assessment of their risk tolerance, skills, experience, financial capacity, and lifestyle goals.
The selling process can take from a few months to a few years. Most businesses sell in 3 to 9 months, but larger or more complicated businesses may take longer.
This depends on many factors and often requires your accountant’s help. Typical questions include whether you’ve used your lifetime capital gains tax exemption, the type of sale (share or asset), and more.
Probably, and this can be beneficial. It can get you a higher price, promote faster sales, give comfort to lenders, facilitate the transaction, reduce your tax liability, and provide ongoing cash flow. The amount of financing varies but is typically around 20% of the purchase price.
The buyer will typically provide a personal guarantee in addition to business security. They also provide their equity in the purchase, usually 30% to 50% of the transaction value.
This varies based on your goals, the buyer’s experience, and the business’s complexity. Training periods can be as short as a few days or as long as three years, with most running for a few months.
Yes, you must sign a non-compete and non-soliciting agreement to assure the purchaser that you will not compete with them or solicit their staff, suppliers, or clients for a reasonable period (3 to 5 years).
Each buyer has a unique negotiating style. Your Business Broker will manage negotiations to find the best deal possible for both parties. Sometimes the best alternative is to walk away, and your broker is trained to handle these situations to minimize the risks during selling your business.