How long is the legal process when closing a deal with a buyer?
The time frame can vary depending on the nature of the business and whether there are any legal complications. However, from signing the heads of agreement until completion, you should usually leave at least six weeks.
Can I still sell a business that is losing money?
Yes. There are many reasons why a buyer may be interested in buying a failing business.
A buyer might be looking for an investment with a low price tag that they can inject capital, ideas and energy into, and turn around to start making a profit.
Your professional advisor can instruct you on settling outstanding legal issues, clearing as many outstanding debts as possible, and demonstrating the business’s potential to prospective buyers.
However, you must also be honest with potential buyers about the business' flaws. These will likely be revealed during due diligence regardless, so it's better to be upfront from the beginning to prevent a last-minute breakdown in negotiations.
Do I need a lawyer to sell my business?
Due to the complicated nature of selling a business, it is wise to have a lawyer involved. You are not legally bound to have one, but there are contracts and legal documents to draft, scrutinize and sign.
For instance, a lawyer can make sure that all your contracts with customers, suppliers, and employees are up to date, draft a non-disclosure agreement (NDA) for the potential buyer to sign before the due diligence process, and negotiate and draft the sales agreement.
Do I pay tax if I sell my business?
If you sell your business, you might have to pay Capital Gains tax, depending on how much the business has increased in value, if any, how much of your personal capital gains exemption you have used, and your income tax bracket.
A share sale is generally preferred by sellers when it comes to the tax implications.
Plan your exit strategy well in advance of selling up to minimize your tax liabilities.
Consult a tax advisor and the government website to sell your business in a tax-efficient manner.
Do you need a broker to sell a business?
The short answer is 'no'. The long answer is more complicated.
The sales process can take up a lot of your time, which may be in short supply if you are very involved with the day to day running of your business. Getting a broker to assist with the sale can allow you to keep your focus on running your business.
You will need to pay the broker fees and/or commissions of course, but these could be dwarfed by the extra returns you get from a higher sale price – so long as you choose the right broker.
Read more in-depth advice on the pros and cons of using a business broker to sell a business.
How can I sell my small business fast?
First, make sure that your asking price is reasonable. If your business is overpriced, you will struggle to find a buyer.
Make your business listing as attractive as possible too. Get some really high quality images of your business to go with the listing and give as much useful information as possible to any potential buyer.
And make sure that you are prepared for the due diligence process. Have all your documents and financials in order and ready when requested.
You could also approach a similar, nearby business that might want to expand their customer base or offerings by purchasing your business. Often, they will not want to buy the premises, and will instead be more interested in acquiring your expertise, intellectual property, and contracts with suppliers.
How do I market my business for sale?
Take advantage of the national and global reach that putting your business online will offer. A broker can help with this process, as well as advertising your business through their established networks.
Whether you advertise online or offline, you should get some high resolution images that give the buyer a clear idea of what your business looks like. You should also include as much information as possible in the advert. The more information you can include without giving away sensitive information, the better.
Luckily, BusinessesForSale.com can help you with this! Our in-house writers can rewrite your listing to make it SEO-optimized and to better capture the attention of buyers.
How do I sell my business privately?
If you want to sell your business privately, you can reach out to customers, suppliers, competitors, and business contacts to see if anyone might be interested.
Be careful, however, not to share sensitive information without having an NDA in place - especially where competitors are concerned.
Alternatively, you can list your business on an online marketplace. This will provide exposure to thousands of potential buyers within Canada and around the world.
How do I value a business?
If you want to value your business before listing it for sale, you could use our valuation tool, ValueRight, or ask a broker to value the business.
How do you value goodwill?
Goodwill is a measure of your business’ reputation among customers, suppliers, and the wider community, and non-physical assets like intellectual property.
Goodwill can make up a significant portion of the value of a business. But, due to its intangible nature, it can be difficult to measure.
There are several methods used to calculate goodwill. Ultimately, the true value is what someone is willing to pay for your business. Find a professional to help with the valuation if you are unsure.
How long does it take to sell a business?
It varies depending on the business and its sector. In general, however, it takes around 6 to 9 months to sell a business.
It might take a lot longer if the business is struggling, if there is a downturn in the market, or if the business is overpriced.
How do I know when it's the right time to sell my business?
We have created a guide to help you through the process of selling a business. If you are struggling with the decision of when to sell, read the section on timing the sale of your business.
What are the steps involved in selling my business?
Our guide to selling a business will take you through the process step by step. If you still have questions after reading this, you can employ the services of a broker to help you.
Alternatively, contact our customer services team to get some advice.
Should my accountant sell the business for me?
An accountant can play an important role in the sale of your business. They can value your business, prepare financial paperwork for due diligence, and structure the deal to minimize your tax liabilities.
Unless your accountant has experience in selling business, though, you may need to find a broker or agent to help you find and negotiate with a buyer.
What happens to cash when selling a business?
The seller of the business will keep the cash on hand as well as the accounts receivable. The buyer takes control of other assets such as merchandise, equipment and the brand itself.
This is not, however, true for all businesses and can vary from one instance to another. Some buyers will take over the accounts receivable in a business so that they can immediately start dealing with customers and get cash flowing into the business.
What is a disclosure letter?
A disclosure letter is an important part of the sale of any business. It is a document where the seller will make any disclosures against any warranties that the buyer will need the seller to give.
A warranty is effectively a legal pledge made by the seller about some aspect of the business that, if broken, gives the buyer the right to claim for losses and damages.
This document will usually be prepared by the seller's legal team for the buyer. Usually, the seller will need to put as much detail and information into the letter as possible. The seller must make sure that the buyer is able to gain a full understanding of each of the matters disclosed.
If, as a seller, you are unsure as to whether something should be included or not, err on the side of caution and put it in.
What is an NDA?
A Non-Disclosure Agreement (NDA) - or confidentiality agreement - sets out sensitive information about the business that the buyer agrees not to disclose to other parties.
Having the buyer sign an NDA before you hand over sensitive information protects you during the due-diligence process.
Ask for professional advice when drafting an NDA to make sure that you have included all relevant sensitive information. This can include employee information, details of your products or technology, and financial information.
Should I sell my small business without a broker?
It is possible to sidestep the fees charged by business brokers when you’re selling your business.
When it comes to finding buyers, advertising your business for sale online is comparatively inexpensive and gives you access to the largest possible pool of prospective buyers.
However, you’ll have to take an active role in every other part of the process - from preparing the business for sale to negotiating terms.
This is more achievable if you have previous experience of selling businesses and the time to dedicate to the process.
But you probably shouldn't go it completely alone. You will still probably need to consult a lawyer and/or an accountant in order to get the accounts and documents in order.
Why might I consider selling my small business with a broker?
When you are looking to sell your business, you will need to keep your foot on the pedal right up until you hand over the keys. This may mean that you don’t have the time to sell your business yourself. You might also be unfamiliar with the process and so need the help of a professional.
A broker will be able to handle much of the sale for you, including drafting non-disclosure agreements (NDAs) and conducting negotiations. Just make sure that you find the right broker - one who you can trust with a good track record.
How do I choose a business broker to sell my business?
You need to assess your needs and circumstances if you’re to find a business broker qualified to sell your business as quickly and lucratively as possible. Find a broker with experience of selling businesses in your sector of a similar size. If you can, speak to previous clients and find out about their experience with that broker.
Most importantly, you need to get on with the broker. And you will need to be able to trust that the broker has your best interests at heart.