Ideally, preparations should begin well before the business is put on the market. Starting early gives you time to identify and address factors that could reduce its value, improve performance, mitigate risks and compile the information potential buyers will require. It also allows you to make the necessary adjustments and position the business favourably for a successful transaction.

A business’s value is based on more than its financial performance. Growth potential, recurring revenue, customer concentration, reliance on key customers or suppliers, management quality and overall risk can all affect valuation. Having a clear understanding of these value drivers is therefore essential before embarking on a sale process or negotiations.

Buyers need comprehensive, reliable information to fully understand the business and assess its risks. It is therefore advisable to prepare in advance the financial information, operational data, key contracts and other documents that will be examined during the transaction. A well-structured file also helps streamline due diligence, reduces uncertainty and minimizes the risk that certain issues might delay or complicate negotiations.

There is no one-size-fits-all financing structure for acquisitions. The right mix depends on the transaction size, available capital, the company’s borrowing capacity and investors’ return expectations. Bank debt, subordinated financing or equity can be combined to establish a financing structure suited to the transaction while preserving the company’s ability to fund its operations and growth.

The transaction structure can have significantly different tax consequences for the buyer and the seller. A share sale, asset sale or hybrid structure may affect the seller’s net proceeds and the buyer’s costs and tax benefits. These tax implications should therefore be assessed at the outset of the process, before the transaction structure is finalized.

Due diligence enables the buyer to validate the seller’s information and gain a clearer understanding of the target company. By examining its financial, tax, legal and operational position, the process helps identify key transaction risks. The findings of the due diligence process may influence the purchase price, transaction structure, payment terms and protections negotiated by the parties.