How do I market my business for sale?

Marketing a business for sale is different from marketing its products. The audience is possible buyers, the product is information about the business, and two risks stand out: word getting out that you are selling, and claims that overstate. If you are working out how to market your business for sale, the order matters: get the paper ready, decide who sees what, choose how buyers will find you, and check that every statement in the pitch can be backed up. This guide covers those four steps for an owner who has already decided to sell, with the legal points that apply to the way you describe the business and share information about it.

Get the documents ready before anyone sees the listing

BDC says an accountant is important for helping you prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see as part of due diligence. It also says buyers want to understand your financial performance and see a track record. Marketing without those documents invites questions you cannot yet answer. Decide in advance what you will release in the first brochure, what waits until a buyer has signed a confidentiality agreement, and what waits until an offer. Keep a list of who has received what, so you can follow up or ask for it back. Ask your accountant which period the statements should cover and whether a buyer will expect figures adjusted for one-time costs, and have those adjustments documented, not just described.

Choose how buyers will find the business

BDC lists a business broker or investment banker among the people who can help you find buyers, and says a broker or other intermediary can help you approach potential buyers such as competitors or other companies in your value chain. It adds that owners of smaller companies may consider putting a listing on a business-for-sale website. Each route has a different cost and a different exposure, so ask each what they will charge, who sees the listing and how they screen enquiries. For how brokers approach it, see How do brokers market a business for sale?.

Protect confidentiality from the first contact

BDC warns that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. Before you share detailed information, use a confidentiality agreement. BDC notes that a letter of intent is very often preceded by a confidentiality agreement that aims to protect the information and documents belonging to both parties. A listing can describe the business without naming it. Ask any site or intermediary how it verifies and screens buyers before it passes on your name.

What you say must not be false or misleading

The Competition Bureau says that under the Competition Act it is against the law to advertise or market something in a way that is false or misleading. It also publishes guidance on how courts decide whether the general impression conveyed by a marketing claim is false or misleading, so the overall impression of your listing counts, not only each sentence. Check each claim about revenue, customers, growth or what is included in the sale against your records. Describe anything uncertain as an estimate, and say what it rests on. Keep a file of the records behind each statement so you can answer a buyer who asks where a number came from. Your lawyer can review the wording before it goes out.

Be careful with personal information

Customer lists, employee files and similar records may contain personal information. Section 7.2 of the federal Personal Information Protection and Electronic Documents Act (PIPEDA), in addition to the circumstances set out in subsections 7(2) and (3), lets organizations that are parties to a prospective business transaction use and disclose personal information without the knowledge or consent of the individual if conditions are met. Those conditions include an agreement requiring the receiving organization to use it solely for purposes related to the transaction, to protect it with appropriate safeguards and, if the deal does not proceed, to return or destroy it within a reasonable time, and the information must be necessary for the transaction. The Privacy Commissioner notes that Alberta, British Columbia and Quebec have their own private-sector privacy laws deemed substantially similar to PIPEDA, so ask your lawyer which privacy law governs your records.

• Which financial statements, projections and records are ready to hand to a serious buyer?
• What will the first brochure say, and what waits for a signed confidentiality agreement?
• Which channel will you use, and how does it screen buyers and protect your name?
• Can each claim in the pitch be backed up from your records?
• Will any personal information be shared, and is there an agreement covering how it is used and returned?

The choices about price, buyer and timing remain yours. For the way a seller’s position changes with demand, see the glossary entry Seller’s market.