Selling a business is a big deal, both figuratively and literally. Whether you’re dreaming of a tropical retirement or moving on to your next entrepreneurial adventure, you probably have a lot of questions. Here are quick takes on 20 common questions we get:

1. How long will it take to sell my business?

That depends - some businesses sell in a few months, while others take a year or more. The timeline depends on factors like industry, financials, buyer interest, and how well you’ve prepared your business for sale. (Spoiler: The more prepared you are, the faster it goes.)

2. What should I do before I put my business on the market?

Preparation is everything. Begin by organizing your financials, optimizing operations, and addressing any legal issues. Most importantly, ensure your business can thrive without you, buyers want a seamless transition, not a company that crumbles in your absence. The less the business depends on you, the more valuable it becomes. So, step back, delegate, and make yourself as replaceable as possible.

3. What factors influence my sale price?

Several elements impact valuation, including (but not limited to) revenue, profitability, industry trends, market demand, growth potential, the buyer's confidence in the future of the business, recurring revenues, and the business’s reliance on the owner. Buyers also consider risk factors like customer concentration and competition.

4. How much is my business worth?

This is the million-dollar question (sometimes literally). A proper valuation considers financial performance, industry trends, market conditions, and assets. A professional valuation will give you a realistic number, your cousin’s “gut feeling” won’t. Chinook Business Advisory provides complimentary valuations, so you can understand what your value is before making any commitments.

5. What financial records do I need?

Buyers want to see at least 3 years of financial statements, tax returns, profit & loss statements, and balance sheets. Clean books make for a smooth sale. (Pro tip: if yours are a mess, start organizing them now.)

6. Should I tell my employees that I’m selling?

Not right away. Premature disclosure can cause uncertainty among staff and customers. Your employees should know at the right stage, typically once a deal is secure and transition plans are in place.

7. Do I need to offer seller financing?

Not necessarily, but it can make your business more attractive to buyers. Seller financing shows confidence in the business and widens the pool of potential buyers who may not have all the cash upfront. The majority of transactions have some vendor financing. Don’t think of it as a loan. Think of it as an annuity invested in a business you know well. If you’re not confident in the business, why would the buyer be?

8. What are the most common deal structures?

Deals can be structured in various ways, but the most common include:

• Asset Sale: The buyer purchases specific assets of the business.
• Share Sale: The buyer acquires ownership of the company’s shares.
• Seller Financing: The seller carries part of the purchase price as a loan.

9. How do I find a buyer?

Finding the right buyer takes strategy. Brokers and intermediaries use marketing, industry connections, and existing databases of potential buyers. Advertising on business-for-sale marketplaces also helps.

10. How do I pre-qualify a potential buyer?

A good buyer isn’t just someone with interest, they need financial capability and industry experience (depending on the business). A business broker helps vet potential buyers to avoid wasting time.

11. Will my competitors find out I’m selling?

Confidentiality is crucial. A well-managed sale keeps your business identity under wraps until serious buyers are vetted and sign an NDA. If word gets out too soon, it can cause unnecessary turmoil, employees may panic, competitors might spread damaging rumours, and suppliers could lose confidence. Keeping the process discreet protects your business’s stability and value.

12. What are the biggest deal killers?

• Poor financial records
• Unrealistic pricing
• Lack of preparation
• Emotional decision-making
• Discovery of issues in due diligence like pending law suits
• Impending industry challenges
• Change in personal situation of buyer or seller

13. Should I keep running my business while selling it?

Yes! A declining business won’t attract buyers. Keep operations strong, selling takes time, and a thriving business is always more valuable. You don’t know when the sale will happen, continue to profit from what you have built.

14. What role does due diligence play?

This is the buyer’s deep dive into your business’s financials, legal documents, contracts, and operations. It’s crucial to have everything in order to avoid delays or red flags. If you're working with a broker or intermediary, they'll assist you in getting all necessary documents ready.

15. What happens to my lease when I sell my business?

That depends on your lease terms. Landlord approval always required. Most landlords will want to keep a new buyer on the existing term of the lease.

16. Will I have to stay on after selling?

Virtually every deal includes a transition period where the seller helps the new owner get up to speed. The length and terms vary, some owners stay on for a few months, others for a year or more.

17. How do I make my business more attractive to buyers?

• Strong financial records
• A well-documented operational process
• A competent management team
• Identifying growth opportunities
• A solid customer base

18. What taxes will I have to pay?

Tax implications vary based on deal structure and location. Capital gains tax is common, but an accountant can help you navigate tax strategies to minimize the hit. Most deals in Canada are sold as a sale of shares, which allows the owner to utilize their personal capital gains tax exemption – ask your accountant what is best for you.

19. What’s the best time to sell a business?

Ideally, when it’s doing well. Buyers want a profitable, growing business, not a struggling one. Economic conditions and industry trends also play a role. Most businesses are sold when it is the right time personally for both buyer and seller.

20. What’s the first step in selling my business?

Start with a valuation. Knowing what your business is worth helps you set realistic expectations and make informed decisions. Then, work with a business broker to strategize your sale. This is a service we offer free of charge at Chinook. We believe you need to know what you can expect and if you can reach your goals before you make any commitments.

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Conclusion

Selling your business is a big milestone, but with the right preparation and expert guidance, it can be a smooth and rewarding process. If you have questions beyond these 20, we’re here to help.

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