Canada: Selling Your Business On Your Terms

Last Updated: November 25 2015
Article by Jeff Pocock

You put your blood, sweat and tears into your business. So, naturally, when it's eventually time to sell you want it to sell for the highest price possible—under your ideal terms. To do that, you need to give yourself ample time to prepare.

Developing a strategy ahead of time will help you understand the strengths and weakness of your business, groom your business for sale and maintain "business as usual" during the potentially lengthy sale process. An effective strategy should also act as a roadmap, helping you to:

Identify ideal timing

Getting the best price for your business involves selling at the right time and under the right market conditions. This means giving yourself enough time to sufficiently increase your business's value, prepare it for sale and then find the right buyer—ideally, a strategic buyer that will be able to leverage the strengths of your business with another organization.

Prepare an information memorandum

An information memorandum is an overview of your business that will be used to market it to potential buyers. While the initial info sheet is rather generic and can be prepared relatively quickly, the second memorandum—issued to interested, pre-qualified buyers who have signed a confidentiality agreement—takes some time to prepare. This second memorandum includes detailed particulars of your business—such as real estate commitments, supplier relationships and customer information—which should be prepared in advance.

Find a buyer

When selling a business, you don't simply put a 'for sale' sign in the window, hoping a qualified buyer might drive by and see it. Finding that "right" buyer can take months of research. You want to not only find potential purchasers that would be interested in buying your business, but are a good fit as well. You need to determine how your business could make theirs stronger—and sell them on it.

Negotiate the deal

Before you head to the negotiating table—or even search for a buyer to negotiate with—you should give some thought as to what your ideal terms would be. When thinking about price, you should consider how much of the price you'd like at closing and whether you'd be open to deferred or contingent payments. You also need to consider whether you want to sell assets or shares of your business—and how involved you'd like to be in the business after the sale (or if you want to be involved at all).

Selling a business can be an emotional—and stressful—journey. By starting the process far in advance, and implementing a sound strategy, you'll not only give yourself time to adjust to the idea, but you'll increase your chances of leaving the business at a price—and on terms—you are happy with.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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