A Comprehensive Guide To Selling A Business

Selling A Business


Selling a business is a complex process. As a business owner you need to understand that there is also a lot of misinformation out there that can and will jeopardize your chances of you ever selling your business.

To help you I’ve compiled An 18 Step Comprehensive Guide To Selling A Business In Canada. A comprehensive guide that outlines the process of selling a small business through to a medium-sized business.

A guide that outlines some of the essential steps you must take in order to sell your business for the highest possible price and in a way that puts more money in YOUR pocket!



The state of your financial statements has a direct effect on the complexity and Terms of an offer you will get from a qualified buyer.

If your financial statements are in a mess, riddled with personal expenses (expenses not pertinent to the normal operation of the business) and or reflect inaccurate data – this will all contribute to you jeopardizing the sale of your own business.

Action Item #1 – Clean up your financial statements!

  • STOP using your business as a personal cash machine, and

With guidance from your accountant:

  • Repay any personal loans you have taken from your business.
  • Remove all assets from the business that are for personal use.
  • Remove all assets from the business that will not be included in the sale.

Step 1 Objective

To have Financial Statement that are clean, accurate and only reflect the expenses pertinent to the normal operation of your business. Timing is important. You need to start cleaning up your financial statements at least 2-3 years prior to the time you actually list your  business for sale.

Additional Resource: Video




Well before you list your business for sale you should proactively discuss the sale of your business with your accountant. Have you accountant talk to you in detail about the Canada Revenue Agency (CRA) requirements and rules that pertain tax and the Lifetime Capital Gain Exemption (LCGE).

This is very important because any mistakes made here can amount to you unnecessarily paying hundreds of thousands of dollars in taxes upon the sale of your business!

Action Item #2 – Determine If You Need To Change Your Accountant.

If your accountant cannot demonstrate they have experience in ensuring their clients qualify for the LCGE or you are not 100% sure of their ability – you need to look for a more suitable and experienced Accountant – straight away.

If your accountant demonstrates that they DO have experience in ensuring their clients qualify for the LCGE and you are 100% sure of their ability – you need to listen to them and implement their advice – straight away.

Step 2 Objective

To determine if your accountant has the experience required to position you and your business in such a way whereby you will qualify for 100% of your LCGE – (pay the minimum amount of tax possible on the sale of your business).

Additional Resource: Article – “Should My Accountant Do My Business Valuation?

Additional Resource: Video




Business Brokers specialize in helping individuals and couples buy and sell small businesses. Business Brokers are the experts when it comes to selling a business.

Experienced Business Brokers are a wealth of valuable knowledge and “hands-on” experience that will save you lots of time, and lots of money.

Identify an experienced Business Broker who you can trust as they will be the person who will evaluate and valuate your business. They will be the trusted expert who will guide you through the entire business selling process.

Furthermore they will be connected to other experts you will need in order to be successfully sell your business. For example, experienced lender representatives as well as experienced lawyers.

Action Item #3 – Have The Business Broker Thorough Review & Valuate Your Business.

Have the Business Broker complete a thoroughly review & valuation of your business. Specifically, the valuation needs to identify what elements of the business are contributing the value of the business as well as what elements of the business are negatively effecting its value.

Action Item #4 – Identify A Suitable Lender Representative.

With very few exceptions, every individual or couple looking to buy your business will need financing.

You and your business have a direct effect on a buyers ability to secure financing so it is important to engage a suitable and experienced lender representative as soon as possible in order to determine if your business is “financeable”.

Step 3 Objective

To identify an experienced Business Broker who you can trust and who can complete a through Review & Valuation of your business.

Additional Resource: Video




Discuss the findings of the Review & Valuation with the Business Broker and with your accountant (and financial advisor). Take the necessary time to polish and optimize every aspect of your business.

Address every concern the lender representative has or potentially has, as it relates to a qualified buyer requiring financing, in order to buy your business.

Step 4 Objective

To maximize the value of your business and determine that the business is “financeable”.




When it comes to selling your business the only lawyer you should hire is a lawyer who is experienced in dealing in small business transactions!

A lawyer who will objectively consider what is in the best interest of all parties involved as well as consider what is in the best interest of the business itself.

Step 5 Objective

To identify a suitable and experienced lawyer.

Additional Resource: Video 




The reality is, it may have taken months, perhaps even a year or two to:

  • Optimize the value of your business,
  • Ensure your business is “financeable”,
  • Prepare your business for the sale, and
  • Confirm with your accountant you will be paying the minimum amount of tax on the sale of your business.

In that time the business selling market and what someone might pay for a business in your industry, might likely have changed.

Furthermore, there might be one or two new comparable business sales you can refer too that would help support the price you want for your business.

It’s therefore important you get another, updated, business valuation completed just prior to confidentially listing your business for sale.

Step 6 Objective

To verify the Sale Price of your business and to ensure you and your business is ready for the sale.

Additional Resource: Pratt’s Stats – Acquired Private Company Transactions Comparables. A good resource for finding comparable business sales. Information you might be able to reference when determining the value of a business you are interested in purchasing.




One of the most important things you need to do, in order to attract that perfect buyer, is to create an awesome Confidential Business Information package. Why? Because first impressions count.

The more complete the information package, the more buyer interest you create and in turn, the quicker that perfect buyer will be identified.

What documents should the Confidential Business Information package include?

  • At least 3 years Accountant Prepared, Year End Financial Statements.
  • If the year end was more than 3 months ago, a complete Interim Statement.
  • A complete, and up to date, copy of the real estate lease agreement.
  • Details pertaining to the equipment included in the sale, and
  • Details of any inventory included in the sale.


The Confidential Business Information package should ONLY be released to those individuals who have been qualified as a serious potential buyer AND who have signed a Confidentiality Agreement – no exceptions!


Step 7 Objective

To create an awesome Confidential Business Information Package that gets sent to qualified buyers who have signed a Confidentiality Agreement.

Additional Resource: Video




It is of paramount importance that the identity of your business be protected.

It is of paramount importance that the value of your business be protected.

This is achieved by confidentially marketing your business for sale. By marketing the business opportunity without giving reference to its name, and without releasing information which inadvertently exposes the identity of the business.

I’ve found the following two websites to be the best at attracting a steady steam of great individuals and couples looking to buy a great business opportunity. These are websites where you can confidentially list a business for sale.


Businesses For Salehttp://www.businessesforsale.com


If you hire a business broker, they too will have a website that attracts individuals and couples looking to buy a great business opportunity, such as:

Business & Finance Canadahttps://businessfinancecanada.com


Step 8 Objective

To confidentially list your business for sale and start attracting qualified buyers.




It is very important that every single buyer (business partner and spouse) enquiring about your business be qualified. No exceptions!

Why? Because you need to quickly identify the serious buyer enquiries (who can secure the financing they need in order to buy your business) from the tire-kickers and from the people who have no money to put towards the purchase of your business.

Every serious “qualified” buyer enquiring about your business should sign a Non Disclosure / Confidentiality Agreement BEFORE they receive the name of your business or any details about your business.

A Non Disclosure / Confidentiality Agreement (CA) is a legally binding document. It’s a potential buyer’s promise that they will keep the confidential information you provide them, to themselves. (The possible exceptions being that they can share the information with their other advisors; being their lender and lawyer).

Step 9 Objective

To quickly identify serious “qualified” potential buyers who have the financial ability to buy your business.




Of the people who have been qualified AND who have signed a CA, now is the time to promptly furnish them with that awesome Confidential Business Information package that was created.

Expert TIP – Follow up with each and every person who receives the confidential information package as the potential buyer will have questions following their review of the preliminary information package.

Step 10 Objective

To further identify those few buyers who continue to be interested in your business.




Of the qualified buyers who remain interested in your business opportunity, they should be encouraged to meet you in person and have a tour of the business, as soon as possible.

Keep in mind that most meetings take place in an evening, after all your staff have gone home.

Expert TIP – The first meeting with each potential buyer is simply a get to know each other meeting – that’s it. Dress appropriately. Start the meeting by asking the potential buyer to explain why they are interested in your business, what experience they think they have to bring to the table and what they hope to find in a business opportunity.

Then take the necessary time to show off your business.

Step 11 Objective

To further identify which potential buyer would be the best person to buy your business.




From a potential buyer’s perspective, there is a huge amount of information the buyer is trying to digest. Therefore there is likely going to be followup questions from the buyer and potentially requests for additional information / supporting documentation.

Expert TIP – Be patient responding to follow up questions from a buyer.

Step 12 Objective

To help the buyer further understand the business and reassure them that you are selling an incredible business opportunity.




If the buyer is excited about the possibility of owning your business they will want to start talking to you about their thoughts of an offer.

Listen to the buyer’s thoughts and talk openly and honestly about your thoughts. Make suggestions as to how the transition of the business might be streamlined. With guidance from your Business Broker, focus the discussion on the “meat and potatoes” of the deal, things like:

  • What would be included in the purchase,
  • When the Target Possession Date might be,
  • What training would be provided and how long it would last,
  • Other transition details,
  • The Purchase Price and how it will be broken down – (Deposit, Cash At Closing etc. etc.).

Expert TIP – If you agree to offer the buyer a Vendor Take Back, you should take the same approach as any lender would offering financing to someone. You should make your acceptance of the buyers offer Conditional to the buyer(s) demonstrating that they a. have a Credit Score higher than 700 and b. are prepared to offer a personal guarantee that the loan will be repaid.

Understand that any buyer’s offer at this point will be a “Conditional Offer”, meaning their offer will be Conditional to such things as:

  • The buyer completing a thorough Due Diligence on your business,
  • The buyer obtaining financing,
  • The buyers review of the real estate lease agreement,
  • The buyers lawyers review of the final Sale Purchase Agreement, etc. etc.

Step 13 Objective

To formulate the outline of a written Conditional Offer, the Terms of which both you and the buyer agree are acceptable.




As soon as a written Conditional Offer has been accepted by both you and the buyer, you need to send your chosen lawyer the following, straight away:

  1. The name and contact information of the buyers lawyer.
  2. A copy of the Conditional Offer.
  3. The meaningful deposit from the buyer.

Actions speak louder than words – this is one of those points in the process where you can determine if the buyer is really serious. A buyer who is truly serious about buying your business will have no issues engaging their lawyer and they will have no issues paying a meaningful deposit to your lawyer.

People who have ulterior motives will keep promising to engage a lawyer and will keep promising to pay a meaningful deposit all the while demanding more and more information from you.

Step 14 Objective

To have your lawyer, and the buyers lawyer, start work together in order to finalize the agreement legally.




The Due Diligence phase is when a potential buyer analyzes and verifies all the information they have received to date, as well as tap down into the details of other information. It’s a process that must follow a pre-determined path – (the exact details unique to your specific situation are beyond the scope of this article).

Step 15 Objective

To provide the buyer, the buyers lender and the buyers legal council with everything they respectively need in order to be satisfied with every aspect of the business sale and purchase.




Finalizing an agreement involves an incredible amount of work by all involved.

That being said, as a business owner you should feel a great deal of comfort knowing you have help and guidance from an experienced Business Broker, from your accountant as well as from your experienced lawyer.

Expert TIP – Generally speaking, the buyer should not be introduced to the staff until ALL Conditions have been satisfied / removed and the Sale Purchase Agreement is legally binding.

Step 16 Objective

To satisfy and remove all Conditions and in turn finalize the sale of your business.




A Final Inspection occurs the night before the buyer legally takes possession of your business. Both you and the buyer need to be present at the Final Inspection.

  • The Final Inspection is a physical inspection of the entire business, AND
  • The Final Inspection is a physical inspection of each asset included in the purchase.

The Final Inspection should end with you presenting the buyer with all the keys to the business, passwords as well as any highly confidential information promised.

Step 17 Objective

To ensure the business is transferred over to the buyer properly and to ensure the buyer is satisfied that everything purchased is present and functioning properly.




As per your agreement with the buyer, complete all post sale activities as promised.

Training will likely be one such activity.

Step 18 Objective

To satisfy your promises and obligations as reflected in the final Sale Purchase Agreement.



CONGRATULATIONS – Your business is SOLD! 





As I’m sure you can appreciate, while there is a lot of great advice in this guide, it is just a fraction of what you need to know when it comes to selling your business.

If you are serious about wanting to sell your business in Canada, I hope you will consider enrolling in my online course – “The 8 Elements Approach To Selling A Business”. It’s Canada’s definitive guide to selling a business.

Selling A Business Course


If you enjoyed reading this article and found it helpful and informative, please do take a moment to Comment & Share! Doing so really will help me get my message out to other people just like you, who are searching for such expert advice.




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