Selling a Business

Selling a Business

Selling a business is a complex and challenging process with serious financial, legal, tax & lifestyle implications. As the world’s largest and most successful network of business brokers, we provide outstanding resources, expertise, and are dedicated to providing you the best possible outcome. Below is a quick overview of the benefits and services provided by Sunbelt.

Managing confidentiality

Confidentiality can be a critical factor in facilitating a successful sale and maintaining maximum value. Due to the potentially disastrous consequences, you will likely not want your staff, suppliers, lenders, customers or competitors to know that you’re selling. We manage confidentiality throughout the entire process beginning with our initial discussions, through to the closing of the deal.

Valuation

Identifying & presenting the true value of your business to prospective buyers is a complex task. In most cases, your financials do not fully reflect the true benefits of ownership. We know how to present the real value of your business to prospective buyers.

Preparing for the sale

There are long lists of items that must be addressed in order to prepare your business for sale. We’ll help you prepare your business and manage the process to ensure that you are as ready as possible to hand over the keys.

Positioning for success

Properly positioning your business in the minds of prospective buyers is critical. We’ll ensure that the merits of your business appeal to the right buyers and that they fully understand the potential of acquiring your business.

Marketing your business

Our team has experience confidentially marketing businesses to targeted, strategic buyers as well as an exclusive list of pre-qualified buyer prospects.

Screening buyers

Our team screens potential buyers to avoid wasting your valuable time with unqualified buyer prospects. We confirm they have the financial capability to buy your business, as well as do our very best to determine whether or not they’re the right potential fit to run it successfully.

Managing the process

Countless details need attending to in the process of selling your business. Addressing these details in a timely manner & managing each step of the process in the right order is critical to a successful outcome. We’ll manage the process, keep things on track, and keep you fully informed every step of the way.

Professional recommendations

It will take a team of experts to sell your business, protect your interests and maximize your bottom line. From lawyers and accountants to tax specialists and wealth planners, we have a network of exceptional professionals that we can recommend.

Negotiating the deal

We strive to reach a win-win outcome when structuring deals between buyers and sellers. Understanding your unique needs and objectives as well as those of the buyer is critical to negotiating a successful agreement. Our approach to facilitating successful win-win deals is one of the reasons that we sell more businesses than any other business intermediaries in the world.

Developing creative solutions

Selling a business often requires many rounds of creative problem solving. Whether it’s structuring the terms of training & coaching or creating the best approach to minimize tax, our network of industry specialists and consulting professionals provides creative problem solving expertise virtually 24/7.

Allowing you to focus on your operations

Our team takes responsibility for selling your business so that you can continue focusing on its operations, ensuring that your business remains in top performance in order to ensure maximum value when a buyer is brought to the table.

Tips On Selling A Business

With such a healthy market of quality businesses in Canada, and half of those planning to transfer control within the next five years, it’s no surprise business owners will be selling into a very competitive marketplace.

Below are some tips for selling your business and protecting its value, so you can increase your personal wealth and reduce the taxes you will need to pay on the proceeds.

For the best results, start planning 3½ to 5 years ahead, allowing at least six months to analyze the business, two years to build value and take advantage of tax strategies to maximize the proceeds of the sale, and another year to sell.

Start by knowing what your business is worth. Identify changes and improvements you could make to add value, and make yourself replaceable. Buyers want to know that they can step in with resources in place to successfully run the business once ownership transfers.

Engage tax, accounting and estate professionals and work with them to structure your business so that you can maximize the proceeds of your sale and pay no more tax than necessary. The two primary tax structures in the sale of a business are the shares of a corporation and the assets of a business. Tax considerations and lead times differ with each option. For a successful share sale, the company must have clean financial statements and financial records. The difference between the cost of the shares and the sale proceeds is a capital gain. By taking advantage of the lifetime capital gains exemption (LCGE), share owners can potentially receive capital gains tax-free. There is, however, typically a 24-month hold rule to claim the capital gains exemption. The share ownership can be split among family members or placed in a family trust so the tax benefit can be used by each member, thus allowing a much larger tax-free capital gain.

Engage an experienced business broker from a reputable firm. Doing so will save you time and effort, while ensuring that you avoid costly mistakes. Business brokers understand the processes to accurately price a business and find/work with buyers. The stages and processes, maintaining confidentiality, negotiating offers, managing the buyer’s due diligence, etc. need careful balancing to bring the deal to a conclusion that works for all parties.

Poor record keeping is the biggest roadblock to selling a business. Ensure that your books, records and financial statements are up-to-date. Prepare at least three years’ worth of financial history. Documents need to be current and correct, demonstrating timely remittances and filings. The balance sheet and income statements will need to be “normalized,” especially in the area of owner’s compensation and discretionary spending. Provide appropriate financial projections and business potential forecasts for your potential buyer.

The most probable selling price (MPSP), prepared by a Sunbelt business broker, represents what the business would sell for on an open market as is, in use, and in place. It factors the true earnings of the business, the state of the business, the associated risks and what the market is willing to pay for the business. A seller’s expectations need to be in line with the market reality in regards to the most probable selling price (MPSP) of the business, as well as the length of time it may take to sell the business. While there are many factors that affect the time it takes to sell a business (the asking price, the buyer’s ability to secure financing to purchase the business, local economic conditions, the nature of the business and where it is located, etc.) a period of 6 to 24 months is typical.

Be honest in the information you provide - full disclosure is essential. Do not hold back or misrepresent information. At some point in the transaction the seller and prospective buyer must each make a leap of faith and trust the other, but the trust will disappear along with the deal if the truth has been stretched and promises and commitments aren’t kept. Share everything. The buyer will be more comfortable.

Often times buyers will require the seller to finance a portion of the purchase price. Seller financing can add as much as 30% to the price of your business, and most often includes interest as well. The terms and conditions on the balance due can be creatively structured in a way that works and is agreeable to both parties. Protect the loan as a financial institution would, but be reasonable. Do not expect a mortgage on the buyer’s home.

Negotiating the right deal takes time and effort, typically some three to nine months. Understanding your buyer’s objectives and reasons for buying is a critical part of structuring the right deal. Above all, do not take the negotiating tactics of the buyer personally, or get caught up in the emotion of the situation. Rely on the professional expertise of your intermediary to negotiate well and create win-win terms that work for both parties.

Get in touch with one of our professionals

If you have questions about buying or selling a business or would like to schedule a consultation, please contact us using the contact form or contact us directly.


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