Our seven-step guide to selling your business in Quebec

There are several steps involved in selling a business, from preparation to transfer. Here’s how you can tackle them.

Most SME owners are not familiar with the business sale process. It requires specialized expertise and you have to continue managing your activities even if you don’t have an in-house team that specializes in these transactions. As a result, calling on professionals from the outset is essential.

Thinking the process through at an early stage gives you more flexibility to prepare your SME, sound out the market and negotiate the terms of the sale.

1. Define your objectives

Before discussing your price or seeking a buyer, ask yourself what kind of transaction you’re hoping for. Naturally, you have financial objectives, but you may also have concerns regarding the future of the company that you built.

Would you prefer to step down completely or remain involved for a while? What kind of buyer are you looking for? What would you like to retain after the sale? The answers to these questions will guide your next decisions.

2. Surround yourself with talented professionals

Selling a business can throw you financial, tax and legal curveballs that go beyond the scope of an SME’s day-to-day management. Calling on a team of business sale experts at an early stage will allow you to tackle any challenges in a coordinated manner.

In addition, you or a few key individuals are the gatekeepers to a significant amount of the information required for the transaction. Your team of professionals can help you gather, organize and present this information in a way that meets buyers’ expectations.

3. Prepare your business for sale

After you define your goals, the next step is to evaluate your business from the perspective of a potential buyer and pinpoint what could impact its value or raise flags.

This preparation process involves:

• separating recurring revenues and expenses from non-recurring items;
• determining whether the management team is strong enough to ensure a successful transition;
• coming up with a realistic business valuation;
• determining whether investments or corrective measures should be taken before putting the business up for sale.

Making certain adjustments can take time. When you identify them early enough, you’re essentially taking action before approaching buyers.

4. Prepare your file for buyers

Potential buyers must be able to quickly grasp your activities, results and what sets your company apart. Therefore, the goal is not to provide them with endless documents, but to summarize the relevant information and highlight the company’s strengths to make it more attractive to buyers and, ultimately, increase its value.

5. Find the right buyer

Depending on your business’s profile, you can target certain strategic buyers during this process or expand the pool.

Attracting interest from multiple buyers will allow you to compare offers and their related terms rather than relying on a single proposal. As a result, you’ll be better placed to negotiate and enhance your offers.

6. See the transaction through to the closing stage

When you select a buyer, a new phase of the transaction begins. The buyer may wish to examine the business more closely before finalizing the sale.

This phase includes:

• due diligence; 
• negotiating the terms of sale;
• drafting sale agreements and legal documentation;
• closing the sale. 

At this stage, the work completed during the previous stages pays off. When you have a strong file, it’s easier to address any issues raised during the due diligence process and keep the transaction on track.

7. Plan the post-transaction phase

Signing the sale contract doesn’t necessarily signal the end of your involvement. In the case of SMEs, a transition period can be planned to transfer certain knowledge, maintain key relationships and support the new owner. 

A portion of the sale price can also be paid at a later date. For example, this may be the case where a balance of the sale price or additional payments linked to the organization’s future performance are retained. You maintain a financial interest in the company’s performance and must carefully review the terms outlined in the agreement.

Are you thinking about selling your SME? Our experts can guide you through each stage of the transaction. Contact us!