Can I sell my business if it depends entirely on me?

Nothing in Canadian law stops you from selling a business that relies on you. The obstacle is commercial. A buyer pays for a business that has to keep earning after you leave, and if customers, suppliers and staff all deal with you personally, a buyer may question how much of that survives your exit. This page covers how that judgement shows up in price and in the shape of the deal. It does not cover how to reduce the dependence, which is a separate question.

How owner dependence shows up in value

In its guide to negotiating a sale, BDC lists, among the factors that determine price, how easily the business can operate without the current owner, and says that strong management teams, documented processes and clear systems increase value. A business where nothing is written down and every key relationship runs through you is the opposite case. Be ready to explain who else knows the customers, the suppliers and the systems.

Deal structures that keep you involved

BDC’s guide to selling says that if your goal is a smooth transition so the business carries on without you, there is a benefit to remaining involved through vendor financing, an earn-out, a phased transfer of ownership, or a role as executive, board member or advisor. It also warns that buyers may insist on a reduced price if you choose to cut all ties, and quotes a BDC adviser saying that in an all-cash-out deal the buyer takes on more risk because the seller is no longer involved.

What to settle with a buyer

• How long you will stay, in what role, and whether you are paid for that time.
• Which relationships you will personally introduce and by when.
• What happens to any deferred payment if results fall after you leave.
• Whether you can be asked to stay longer than the agreement says.

Each of those points is something to write into the agreement rather than leave to goodwill, so that both sides know what your involvement covers. A lawyer can draft a transition or consulting term so it is clear what you owe and what you are paid. BDC says a business valuator can give you a realistic picture of what your business is worth, so ask a valuator, such as a Chartered Business Valuator, how the dependence affects that figure.