Can I quietly test the market without deciding to sell my business?

An owner can find out what the market might offer without committing to a sale, and how quietly that happens depends on the route chosen. The Business Development Bank of Canada (BDC) describes several ways to find buyers, from a team of advisers and brokers to industry contacts and online platforms. The steps below start with the most private.

Private first steps

BDC says a business valuator can give an owner an accurate sense of what price a business could fetch, and that a value below expectations is a chance to look at improving the business first. It also quotes one of its directors saying that a lot of people underestimate how long it takes to prepare a business for sale. A valuation and a records review with your own accountant involve only your own advisers.

Approaching buyers through an intermediary

BDC says business brokers and investment bankers have a broad network of qualified buyers whom they can discreetly approach on the owner’s behalf, and it quotes one of its directors saying they have a process for reaching a very broad number of acquirers, vetting them and following a timeline for them to express their interest. Read any engagement terms closely before signing, including what they require if you decide not to sell.

Where word can get out

BDC warns that, depending on a business-for-sale website’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling, and it notes that a change in ownership can be disruptive for all three. Check how any platform or intermediary screens who sees your details, and what is published, before anything goes live.

Sharing information safely

Buyers may ask for detail, and some of it is personal information about customers or employees. Under subsection 7.2(1) of the Personal Information Protection and Electronic Documents Act, parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if their agreement requires the organization receiving it to use it solely for purposes related to the transaction, to protect it with appropriate safeguards and, if the transaction does not proceed, to return or destroy it within a reasonable time, and the information is necessary to determine whether to proceed. Whether a given piece of detail about individuals is necessary at an early stage is a question for a lawyer. Where the Governor in Council is satisfied that substantially similar provincial legislation applies, it can exempt organizations from Part 1 of the Act for information handled within that province, so a provincial law may apply instead.