How to Sell a Business in BC
Selling a business is a strategic, long term process, not an overnight decision. Business owners who are looking to sell have likely been contemplating this choice for months or years. Once the decision is made, it can be difficult to understand the overall steps and details required to sell a business. When laid out plainly, each phase of the process to selling a business can feel overwhelming, which is why it is important to have the right team on your side.
For anyone looking to sell a business, sales is likely already a part of your day-to-day routine, however this is no regular sale. More than just reaching an agreed sale price, owners are responsible for compiling documents, seeking professional advice from accountants and lawyers, as well as a business valuator and more. The internet is full of do’s and don’ts for selling a business, and this can make it difficult to know how to move forward. An experienced business broker can help from the very beginning of the sale process.
Selling Your Business: A Step-by-Step Guide
The process of selling a business in British Columbia does not start with a sales listing, as it begins well before that step. As a business owner, there are many reasons that you might be choosing to sell, each of which will contribute to the overall goal of a sale. The first step toward a successful sale is to understand the motivations for selling.
Exit Planning
The reason for selling can influence marketing plans and even the outcome of the sale itself. In the event that an owner is looking to retire, there may not be a rush to finalize the sale. The same principle applies to those owners looking to break into other ventures. If the reason for selling revolves around health or financial issues, the aim might be to sell the business quickly.
Some of the questions that might be asked when selling might include:
- How soon are you looking to leave the business?
- Will you be helping with the transition or leaving once the sale is finalized?
Organize & Compile Documents
During the course of a sale, sellers will go through a rigorous due diligence phase. Presenting a clear and concise profile of your business will appeal to more potential buyers. Documentation goes well beyond just revenue but should also cover legal standings, assets, operations and overall financial health.
- Documentation of financial health, legal standings and operations
- Collect tax filings, disclose estimated cash flow, and average annual revenue
- Employee benefit plans
- Employee handbooks and SOPs (Standards of Practice)
- Certifications & Licenses
- Insurance information
Outline Assets
The value of a business should account for any assets included in the sale. Some of these assets are more obvious than others. It’s easy to recognize buildings or vehicles as assets, but identifying intangible assets like logos or intellectual property can be tricky. A broker will help to define assets and include them in the business profile. Some of these include:
- Logos and trademarks
- Business name and branding
- Business licenses and Patents
- Strong brand reputation
- Existing inventory
- Website and domain name
- Software and CRMs
- Loyal customer bases
- Vendor Contracts
Assessments & Improvements
One of the primary features that prospective buyers will look for is the possibility of a smooth transition. If a buyer is reviewing your business profiles and notices that equipment will need to be upgraded or new software needs to be implemented, they may factor that into the sale price.
As a seller, it’s important to review operations, noting inefficiencies and outdated systems. Take note of any updates that will add value to the business and weigh out the return on investment for each. Something as simple as replacing older machines or computers, incorporating new software or creating SOPs can make a huge difference to the profile of your business. Tackling these small projects before listing allows sellers to maximize their sale price.
How a Broker Can Help Sell Your Business
Working with a broker early on means a smoother process, reducing the risk of costly mistakes and ensuring the best possible results. An experienced broker will help maximize the sale price, minimize tax liabilities and expenses, and achieve a higher sale price.
Build an Attractive Profile
A business profile should showcase the history of the business (past profits, growth projections, etc.), as well as the goals of the business that previous owners have been working toward. Brokers will assemble all of the necessary details to create a packet or profile that can be presented to pre-qualified buyers. Business brokers will also help to organize NDAs and confidentiality agreements to keep sensitive information private.
Assemble a Team
The sale of a business touches on many different disciplines and industries. Having a broker is a great asset, but a successful sale requires accountants and legal guidance as well. Business brokers have networks of professionals who are able to guide clients from starting points to finish lines. From preparing documentation for presentation to negotiating the terms of a sale, your broker will offer advice on who to speak to and when.
Launch Effective Marketing Campaigns
Brokers are experts in marketing businesses! Experienced brokers understand how to present business profiles to potential buyers in a way that is clear, concise and appealing.
Connect With Buyers
Brokers have access to an established network of vetted buyers and understand where to list your business profile for the best possible results. Instead of casting a wider net, brokers appeal to targeted audiences, saving time and resources.
