What should I do first when I’m thinking about selling my business?

The first move is a set of decisions, not a listing. BDC says many owners wait too long to start planning and then sell at a time that is not ideal, for example because of health, and do not get the best outcome. CFIB’s research adds that poorly managed ownership transitions can end in a premature sale at less than full value.

Be clear on your reasons and goals

BDC calls being clear on your reasons for selling vital, because they will likely influence your goals for the transaction, meaning what you want out of it. An owner who wants a clean break and one who wants to stay involved, for instance through vendor financing, an earn-out or a phased transfer of ownership, are planning different sales.

Bring in advisors before buyers

BDC describes an accountant who prepares the statements buyers ask for and a lawyer who supplies information in due diligence and negotiates the purchase agreement. The CRA’s page for sellers shows why structure matters early: it covers the business number, payroll, GST/HST, change of ownership and the value of inventory and other assets, and says the GST/HST election cannot be made if you sell only one or more assets of the business, or if you are a registrant and the purchaser is not.

Find out what the business is worth

BDC advises having a clear idea of what your company is worth before you seek to sell, and says owners sometimes have a mistaken perception of its value. A business valuator can give you an accurate sense of what price it could fetch, though BDC also notes that fair market value is not necessarily the price it will sell for.

Decide who needs to know

BDC warns that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling, and says brokers and investment bankers can discreetly approach buyers on your behalf. Once these steps are done, preparing the business for sale is the next stage.