Planning to Sell Your Business: the Key to Success

According to Repreneuriat Québec (article in French only), more than 50,000 Quebec businesses will be transferred over the next five years. And yet, 61% of business owners have still to put in place a succession plan. Against this backdrop, it is best to begin the process well before putting the business on the market, since decisions made today can influence the value of your organization and the terms of the transaction.  

Financial performance is the primary driver of valuation  

Financial performance is generally one of the main factors influencing the value of a business. However, buyers do not just look at the level of profitability. Above all, they seek to determine whether these results are sustainable over time. 

You must therefore be ready to provide reliable and detailed financial information, including: 

• normalized EBIDTA, which clearly distinguishes recurring items form non-recurring items;
• trends in revenue and margins, together with the driving factors;  
• customer concentration, the proportion of recurring revenue and the quality of contracts;  
• relationships with key suppliers;  
• realistic financial forecasts based on sound assumptions, which underscore the growth potential.  

Why your business should not rely solely on you 

A business that can operate without the day-to-day involvement of its owner is generally easier to transfer. Conversely, a heavy reliance on the shareholder — whether for client relations, suppliers, key employees or operational decisions — can pose a risk to a buyer and influence their perception of value. 

Before you put your business on the market, you should therefore try reducing this dependence by developing a strong management team and gradually delegating certain responsibilities. 

What should be resolved before your business is put up for sale  

Before you try selling your business, you want to identify any issues that could raise red flags during due diligence and address them, to the best of your ability.  

Pay particular attention to the following: 

• the quality of financial information and management systems;  
• working capital, in particular trade accounts receivable and inventories;  
• the condition of equipment;  
• major contracts with clients, suppliers and key employees;
• unresolved tax issues or legal and environmental matters;
• any significant reliance on a partner or key individual. 

Why you should turn to a professional advisor  

Your advisor is not merely there to find a buyer. They have a key role in structuring the sales process to successfully position your business and attract the most relevant buyers. 

Where appropriate, approaching several potential buyers helps to create competitive momentum.

This can have a positive impact not only on the offer price but also on other negotiated terms. 

Having a well-prepared file also helps to reduce areas of uncertainty and facilitate the due diligence process. 

How we can help 

Our experts guide you through every stage of the sales process: 

• To assess your business and establish a value range based on market conditions;  
• To help you prepare for each step and put together the documentation you need for going to market and due diligence;  
• To identify and approach potential buyers;  
• To structure and coordinate a competitive process that will optimize the value and terms of the transaction;  
• To support you through the negotiations until completion. 

Our professionals support you from strategy development right through to closing the transaction. You therefore benefit from an integrated team combining the experience and expertise necessary for the success of your transaction. 

Are you thinking about selling your business and asking yourself where to start? Contact us.