How to Prepare Your Business for Sale in Canada
People invest a lot of time, money and effort in building up a business. Yet, after some time, they may find it does not yield the expected returns, or they decide to move on to other things and this is the time when they need to put their business for sale. Whatever the reason, the process of selling is not an easy task and therefore, you need to take certain steps to prepare your business for sale.
Determine the Scope of the Sale
Make a list of all the assets of your business and make a decision about which parts you wish to sell. Will you sell all your physical assets, trademarks and client lists or hold something back? If you have employees, will they find other jobs or transfer into the employment of the new owner to whom you sell?
For incorporated businesses, it is vital to determine if you are selling the company itself or just the assets. Deciding this is a useful first step to determining the value of the sale.
Choose the Right Time
If you sense yourself beginning to lose interest in running the business or realize that ill-health or age factors are going to make it difficult to manage your business, plan to put up your business for sale at the earliest.
As you grow older and frailer, it will become increasingly difficult to hold on to the terms you wish; a fact that buyers will use to their advantage. As far as possible, do not wait for your business to begin incurring a loss before deciding to sell; successful businesses fetch better rates as compared to those on the decline.
Get Your Papers Ready
Potential buyers always look at the financial and legal aspects of the business before buying it. So, make sure you have everything in order – no lawsuits that are pending, no lagging behind on the business records, and no defaults on tax payments, permits and licensing agreements in order and no huge deficits in your inventory.
Keep financial records of at least the past three years including accountant reviews and audit data to show to potential buyers.
Determine Your Business Value
Use the Canadian Institute of Chartered Business Valuators’ website to find and hire a professional business valuator who can help you determine the worth of your business for sale.
Having an expert’s opinion where different factors have been considered – your assets, present market standings, current economic trends, market situations, present market prices – gives your quote a greater credibility in the eyes of potential buyers.
Hire Professional Help
Have a financial consultant help you deal with the financial nitty gritty of the sale – tax issues, structuring the sale and determining the value of the sale. Use a lawyer to draw up the necessary sale documents and agreements.
Putting a business for sale can be a hugely emotional event but it is important to not let emotions overrule practicality. Plan for the sale well in advance when you still have the time to look into the details to ensure the business you lovingly built up gives you the best returns when it is time to let go.