How to sell your business in the GTA without everyone finding out

If word gets out too early, staff may start leaving, customers may drift, and the landlord may stiffen the terms. A good sale is quiet until the right buyer is signed. Here's how that works.

1. Get your numbers buyer-ready

• 3 years of financial statements and tax returns, with HST filings that match
• A list of equipment and fixtures included in the sale, and what is leased
• Your owner's benefit: profit plus your salary and one-time or personal costs. This is the number buyers and lenders price from
• A note on anything unusual this year, such as a closure, renovation or staffing gap

2. Fix the lease first

Buyers and their lenders usually want the remaining lease term, including renewals, to cover their loan. If you have less than about 5 years left, talk to the landlord about an extension before you go to market, and read your assignment clause so you know what consent the landlord can require.

3. Set a realistic price

Small businesses are generally priced from earnings (owner's benefit), adjusted for the lease, the equipment, the industry and how dependent the business is on you. Over-pricing is the most common reason businesses sit unsold. A market opinion from comparable sales is a good starting point. For a formal number, use a Chartered Business Valuator.

4. Market it confidentially

• Use a blind listing: industry, area and numbers, but no name or address
• Require a signed NDA before releasing the name, financials or lease
• Require proof of funds or pre-approval before any site visit
• Hold visits after hours, and keep staff out of it until conditions are waived

5. Offer to closing

1. Offer with conditions: buyer financing, due diligence, landlord consent and licence approvals
2. Buyer's lender review. Many buyers use CSBFP or BDC financing
3. Landlord assignment, and licence transfers or new applications (liquor, lottery, child care and so on)
4. Closing, then a training period with the buyer

Consider a vendor take-back, where you finance part of the price. It widens your buyer pool and often gets you a better price.

Selling a franchise? Read Buying a franchise in Ontario to understand what your buyer must go through. Selling a daycare? Read Buying a licensed daycare in Ontario, because the licensing timeline affects your closing date.

General information, not legal, tax or valuation advice.

Speak with Inderpal Sidhu
Direct: (647) 338-6875
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HomeLife Silvercity Realty Inc., Brokerage. Independently owned and operated.