Home | Business | Business Opportunities

Selling a Business to Retire

By: Steve1 Skra1 Click author's name for more of his/her articles

The next five to ten years will see a massive increase in the number of businesses listed for sale. The baby boomer generation in Canada will be retiring in massive numbers. Many of these boomers are business owners with significant proportions of their wealth invested in their business equity. Often, the next generation of a family has no desire to take over a business and a management buyout is not practical, so listing a business for sale is a common solution. This article will examine some tips to keep in mind if you are thinking of retiring in the near term – and how to extract as much value from your business sale.

Plan ahead to get your business ready to sell

Too often, business owners decide to sell a business at the very last minute. This is highly unadvisable. If you are serious about selling your business, start planning at least 24 months in advance. Ensure that your business is operating at full capacity with good revenue and earnings growth. Business buyers will be far more attracted to a business that is trending on an upward trajectory than a business that is declining year over year. Also, ensure that operation manuals are kept up to date all that all equipment and machinery is in good working order.

Tax strategy

Selling a business is a much more complicated process that a typical real estate deal. When you plan to sell your company you may have different various tax strategies at your disposal in order to maximize your final cashflow. For instance, selling business assets versus shares can have major tax consequences for you. Talk to an accountant early into the sale process.

Work with a Reputable Business Broker

Selling a business on the ‘open market’ usually means working with a business broker. A professional business broker can assist you in many different ways:

- Help you determine a list price for your business

- Create a marketing package

- Keep the sale confidential (if you so choose)

- Find and screen business buyers

- Handle due diligence

- Foster good communication between the buyer and the seller

Choose to work with a business broker that has a good reputation and that your are confident will do a good job for you. Personal chemistry is important with the person you deal with too as it may take several months to sell the business so you want to make sure you can work productively with the broker. Also, a competent business broker should have no issue in dealing with your accountant or lawyer. Avoid someone who states that they are not comfortable in dealing with your professional advisors.

Be prepared for a long process

Selling a business can take several months. There is the potential for many showings, a few offers that fall apart during due diligence and even buyers who can’t come up with the financing after all is said and done. As mentioned earlier, selling businesses is a completely different process than a real estate sale so please work with a professional that specializes in the field of business brokerage to guide you through the process.