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Tips And Best Practices

Tips for Selling Your Business

Tax considerations are a critical aspect to evaluate when preparing to sell your business. The net after-tax value retained by you is a more important measure than the actual company sale price.
Most sellers would like to sell their company as Shares of an ongoing business operation to take advantage of the Qualifying Small Business Credit (QSBC), which has been increased to $913,630 in 2022 from $892,218 in 2021.
Source: Canada Revenue Agency
Most buyers would prefer to purchase a company as an Asset sale as it reduces the risks of customer, warranty, employee or CRA liabilities and resets company assets at current market value.
Plan several years in advance of your desired Company Exit. Preparing your company, finding the Right Buyer, & structuring a deal often takes longer than expected to accomplish.
Redundant assets (such as buildings or personal assets) should be moved out of the business to make it easier to sell and provide a more accurate statement of earnings.
Ownership changes should normally be completed 2 years in advance of closing in order to qualify in a CRA audit.
Get prepared! The due diligence required by most buyers, especially if financing is involved, can be very extensive. Monthly P & L statements, cashflow analysis, credit checks, employee bios, accreditation certificates are just some of the normal requests for review. If you are prepared, the process will be less cumbersome and will move more quickly to close.
Start delegating and training other staff. This will allow you more flexibility to reduce hours or depart when a new buyer comes in. Otherwise they may require you to stay for an extended period to train the buyer or other employees.

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