Selling a Business
Selling a business may be one of the most challenging things for a business person to complete. It's very different from selling one's principle residence where you simply select from a number of real estate agents.
Naturally attracting the right potential buyer and presenting the business in a manner that maximizes your return are crucial. By answering the following questions, this may assist you in determining your likelihood of a successful sale:
- Do you understand how potential buyers will value your business and why they would want to buy your business?
- Do you have a package of information that is likely to arouse interest in buying your business?
- Have you identified potential buyers most likely to meet your price and other objectives?
- Do you have the experienced advisors to locate buyers, assist with structuring the transaction and manage the selling process in a confidential manner?
If you answered 'no' or are unsure of the answers to any of the above, we can help you. Call Joe at 905-528-0234 to arrange a free, no obligation, initial meeting.
We understand what is involved in selling a business and can assist you in maximizing the return and minimize the risks of selling your business.
Many of our clients have discovered that selling their business is much more difficult, challenging and time consuming that it first appears and most business owners do not really know where to go to get assistance in selling their business.
In order to maximize the proceeds that you can receive, we will likely need to introduce you to as many potential buyers as possible. The process can take some time, anywhere from 3 to 9 months, depending upon the nature of your business.
Some of the steps and procedures that may be used in your situation could include:
- define objectives and develop a plan
- determine a realistic price range for the value of the business
- determine any synergies, or favourable buyer attributes that would increase the value of your business
- prepare an information package for prospective buyers
- market research and identify buyer candidates
- provide information to potential buyers
- assist with letter of intent negotiations
- assist with due diligence review
- assist with closing the transaction
For some of our larger clients, we have successfully sold their business by working with a variety of specialized business brokers who specialize in the sale of 'large' businesses.
Tax issues are paramount in selling a business to maximize the after-tax return to the shareholder. We evaluate the various ways of selling a business to determine the most tax-effective overall plan. We:
- design the transactions required to put the tax planning in place
- assist with reviewing the legal documentation
- assist in negotiating the terms of the sale, with particular emphasis on the tax issues involved
- complete all necessary tax filings and tax elections
We work closely with legal counsel and our business valuators where required. Sometimes, we can minimize tax by incorporating certain international and non-resident tax-planning strategies. We can also suggest creative approaches such as earnouts, employee-funded purchases, share-for-share exchanges, and sale/leaseback transactions.
Some of the income tax considerations to review in the sale of a business may include the following:
- Share sale vs. asset sale
- Capital gains exemption
- Purification of the company for sale purposes
- Capital dividend account
- Receipt of proceeds
- Capital dividend account
- Retiring allowances
- Capital gains reserve
- Allocation of selling price
We have been involved in assisting clients buy and sell their businesses for many years. Please call us for a free consultation at 905-528-0234.
Over the years, Joe Truscott has written many individual income tax and business articles which have been posted here for you to review. You can also review many additional articles that have appeared in his quarterly client bulletin called Business Matters.
