Guide
Preparing your business for sale
What to sort out before a buyer sees anything.
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Buyers pay for a business they can understand and check. Most of the work of selling happens before a buyer sees anything: clean numbers, a secure lease, and a business that doesn’t depend on you for everything.
Starting a year or more ahead gives you time to fix what a buyer would otherwise use to lower the price. Even a few months helps.
General information only, not legal, tax or accounting advice.
Get the numbers in order
A buyer, and the buyer’s bank, will ask for several years of financial statements and tax returns, and will compare them. If they don’t match, expect hard questions or a lower offer.
- Three years of accountant-prepared financial statements, plus this year to date.
- Corporate tax returns that match the statements.
- A clear list of personal or one-time costs run through the business, with receipts, so earnings can be adjusted fairly.
- Monthly sales figures, so a buyer can see seasons and trends.
See how a business is valued for why adjusted earnings matter.
Fix the lease early
If you rent your space, the lease is often the first thing a buyer and their lender check. A buyer needs enough term left, or renewal options, to make the price make sense. Read your lease for the assignment clause and any landlord consent you’ll need, and talk to your landlord before a buyer is in the picture. See fix the lease before you have a buyer, and the deeper guide on your lease when you sell.
Make the business less about you
A business that only runs when the owner is there is harder to sell and harder to finance. Over the months before a sale:
- Write down how things are doneOrdering, pricing, scheduling, key suppliers, passwords held in a safe place.
- Hand off key relationshipsLet a manager or senior staff deal with main customers and suppliers.
- Put agreements in writingCustomer contracts, supplier terms and employment agreements a buyer can read.
- Plan your transition roleDecide how long you’re willing to stay on to train the buyer.
Tidy the rest
- An up-to-date list of equipment and what’s owned, leased or financed.
- Licences and permits current, and filings with the BC Registry up to date.
- Any disputes, liens or outstanding claims dealt with or written up.
- Repairs done on anything a buyer would notice on a walk-through.
Talk to your advisers first
Speak with your accountant and lawyer before you go to market. How the sale is structured, an asset sale or a share sale, affects your tax and what you need to prepare. See asset or share sale.