How do I find buyers for my business in Canada, and what should I protect while doing it?

Owners who ask which is the best website to sell a business are really asking two questions: where will serious buyers see my business, and who else will see it? The first is a marketing problem and the second is a protection problem, and they pull against each other. The wider the audience, the more care the process needs. This guide sets out the routes BDC describes for reaching buyers, and then the points to protect while you use them: your identity, your information and the personal information of your customers and staff.

Start with the buyers you already know

BDC suggests several routes. Your accountant, lawyer, banker and other professionals may hear of entrepreneurs who want to acquire a business, an advisory board may connect you with buyers, and industry contacts can be a source. It also says potential acquirers could include competitors interested in expanding their product line or market share, or other companies in your value chain. It adds that the right buyer may depend partly on your goals and reasons for selling, whether that is a family member, a group of employees or an outside buyer.

Brokers and advisers

BDC says that, depending on a company’s size, you can find buyers through a business broker for smaller businesses or an investment banker for larger ones, and that these intermediaries have access to a broad network of qualified buyers whom they can discreetly approach on your behalf. A broker is a partner here, not a rival to your own search. Ask any broker how they approach buyers without naming you, what they charge, and whether the listing is exclusive. Our answer on listing with more than one broker covers that last point.

Online sale sites

BDC notes that owners of smaller companies may consider a business-for-sale website, but should check the site’s reliability before signing on, and warns that, depending on the site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. Before you list anywhere, ask what the public sees, whether your name and address are hidden, who can ask for more detail, and how that person is screened. Our answer on listing your business for sale covers the listing process.

Protect your information with a confidentiality agreement

BDC says it is customary to sign a confidentiality agreement and to write a letter of intent when pursuing discussions with a seller. It describes the letter of intent as very often preceded by a confidentiality agreement that aims to protect the information and documents belonging to both parties. For a seller, that means releasing your name, financial statements and customer details only after the buyer has signed. Our glossary entry on the non-disclosure agreement explains what it is for. Have a lawyer draft or review yours, and ask whether it should also cover the buyer’s advisers, lenders and any partners who will see your information.

Protect personal information about customers and staff

Customer lists and employee records contain personal information. Where the federal Personal Information Protection and Electronic Documents Act applies, section 7.2 provides that, in addition to the circumstances in subsections 7(2) and (3), organizations that are parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if two conditions are met. First, they have signed an agreement requiring the recipient to use and disclose it solely for purposes related to the transaction, to protect it by security safeguards appropriate to its sensitivity and, if the deal does not proceed, to return or destroy it within a reasonable time. Second, the information is necessary to decide whether to proceed and, if so, to complete the deal. The section does not apply to a transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information. Share only what a buyer needs at each stage, and keep a log of what went to whom, so that you can ask for it back or confirm its destruction if the deal does not proceed.

Plan what you will say to staff, customers and suppliers

BDC notes that a change in business ownership can be disruptive for employees, customers and suppliers, and it suggests working out a transition plan with the buyer that includes a plan to retain them and how you will communicate with them about the change. Confidentiality and communication are linked. The fewer people who know before a buyer is signed, the less there is to manage, but BDC’s warning about sale sites applies more widely: word could get out to employees, customers or suppliers. Decide in advance who may meet a buyer, where, and what they may say.

What to settle before you go to market

• Which routes will you use first: your own contacts, a broker or adviser, an online site, or a combination?
• What can a buyer see before signing a confidentiality agreement, and who approves each request?
• Does your confidentiality agreement meet the conditions in section 7.2 for any personal information you will share?
• When will you tell employees, customers and suppliers, and what will you say if word gets out first?