We know the market and have access to a database of active buyers—owner-operators, financial buyers and strategic acquirers—looking for businesses. BizBuy saves you time by prequalifying prospective buyers’ resources and potential for acquiring your business, eliminating “tire kickers”. We take care of finding you a buyer so can your full attention on running your business to keep it in top shape.
Try Our Proven selling Process
BizBuy’s business sales process has evolved over the years into what it is today: a streamlined system that helps business owners successfully complete the sale of their business and earn top dollar in the process. Considering selling your business? Have a look at our success proven 7-step process:
CONSULTING AND VALUATION
During a no-cost, no-obligation introductory consultation, we’ll talk with you to learn more about your business and its unique attributes. We tell you about what we do, how we do it, what it costs, and what you can expect in the process—and of course, everything we discuss is completely confidential. Afterward, we’ll perform a complimentary valuation, showing your business’ range of value and will do pre-screening with a lender to ensure it meets current lending guidelines.
PACKagINg AND MARKETING THE BUSINESS (CONFEDIALITY)
Once you’ve engaged with BizBuy, we’ll get to work packaging the business for sale, gathering all necessary info into a 2-3 page “summary profile” that provides pertinent details on the business’ greatest differentiators and assets – without disclosing any sensitive details or names. We’ll use that summary profile and other materials to market your business to our own network of thousands of prospective buyers, as well as marketing your business via the internet, strategic direct mail pieces, newsletters and more. When we do this, we go to great lengths to keep the identity of your business confidential – using generic phrases to describe your business rather than its actual name.
Once inquiries begin arriving in response to our marketing efforts, we’ll begin the process of pre-screening buyers to ensure they’re serious and financially capable of purchasing your business. We protect your confidentiality by insisting prospective buyers sign Non-Disclosure (NDA) or confidentiality agreements, then meet with them face-to-face (if local) to educate them on the buying process. We’ll also present them to you for your approval before we release any sensitive information such as your business’ name to them.
The next step is typically a meeting with the prospective buyer, you (the seller) and your BizBuy intermediary. The discussion is typically kept “high level” and related to strategy, company history, nature of the business, etc. The review of smaller details and fact-checking are typically handled post-offer during the due diligence phase. This is done only while in BizBuy’s office, as we do not allow prospective buyers to have copies of financials prior to an offer, in order to protect your privacy and ensure the highest level of confidentiality.
“OFFER FOR PURCHASE” REVIEW & NEGOTIATION
When a prospective buyer decides they want to buy your business, the formalization of that is typically with an “Offer for Purchase” or “Letter of Intent” (LOI). This document outlines the details of the offer – the offered purchase price, the payment terms, the training and transition period, any required employment agreement or non-compete agreements and any other conditions related to their offer. We’ll meet with you to explain the offer and discuss its various components. You can decide to accept the offer, reject it, or negotiate on certain aspects of it. We’ll offer our expert opinion and guidance to help you make the right decision for you.
DUE DILIGENCE AND ONGOING MARKETING
The “due diligence” period takes place after you have accepted an offer from the buyer. The buyer then uses this time prior to the official closing to perform their due diligence. Typically this involves getting detailed financial and bank statements, copies of any contracts you may have with your suppliers or customers, copies of any leases, etc. The length of this period and level of detail can vary greatly, and is generally dictated by the buyer. In our experience, most of the time it runs between two and six weeks.
When due diligence and buyer financing are complete, it’s time to draft the closing documents and complete the sale. BizBuy sticks with you during every step in the process—we don’t disappear at closing but are with you side-by-side in case any last minute questions or concerns arise. We can recommend legal counsel (attorneys) and financial counsel (accountants) as well to help you with the various contracts and legal documents and to ensure you minimize the tax impact of the sale.
Finally, we’ll ensure that you collect your funds and have all of the documentation you need when you leave the closing table. In general, the total length of time from offer acceptance to closing (when funds are received) is typically in the range of 60-75 days, but can vary shorter or longer in some cases. This includes the due diligence phase, pre-closing (drafting the sale contracts) and the closing itself.
HOW MUCH IS YOUR BUSINESS WORTH?
As a business owner, knowing your business’ market value is important when you sell your business, but that’s not the only reason it matters. For example, if you’re shopping around for life insurance policies, are doing estate planning with your financial advisor or are interested in obtaining a loan you’ll need to know your net worth—and as a business owner, the value of your company will be a big part of it.
THINGS TO KNOW BEFORE YOU SELL YOUR BUSINESS
Selling a business can be an emotional process—one that may be simultaneously exciting, scary, sad and even a bit intimidating. But the right business broker can help make the business sales process much more straightforward.
At BizBuy.ca, we’ve sold enough businesses to have a clear picture of what makes a business attractive to potential buyers. If you’re thinking about selling your business, here’s what you need to know first:
Having a realistic valuation of your business will be key to pricing it well and selling it quickly without leaving money on the table. Insist on working with a business broker who has a proven valuation process and a track record of successfully closed sales. We offer free appraisals as the first step, even if you aren’t sure you want to sell your business.
When you’re considering working with a business broker, knowing about up their upfront fees and commissions is important. So is having an idea of fees to expect from other participants in the process, like the legal team that will close the sale. Choose a business broker who is completely forthcoming when it comes to discussing fees.
Keeping your personal and business identity confidential is imperative to ensuring a smooth sales transaction—but some brokers will send your sensitive financial information and other materials to anyone who requests them, without vetting them to ensure they’re a serious buyer. It’s crucial you choose a business broker who makes your confidentiality their top priority.
Selling a business typically doesn’t happen overnight; instead, it takes time. What process will the business broker be following to sell your business, and does that process have a proven track record? Work with a business broker who fully explains how their process works and is there throughout the process to answer any questions that arise.
Depending on the type of business you have, its size and its value, anyone from an individual owner/operator to a financial buyer, a strategic buyer, or even a private equity firm may be interested. Insist on partnering with a business broker who has experience working with the types of buyers your business is most likely to attract.
If you’re serious about selling your business, you owe it to yourself to contact us. We specialize in selling businesses in Toronto and the GTA and throughout Canada.
WHAT YOU NEED TO GET STARTED
Before you even think about placing your business for sale, there are some things you should do first. The first thing you have to do is to gather information about the business.
Here’s a checklist of the items you should get together:
- Three years’ profit and loss statements
- Federal Income Tax returns for the business
- List of fixtures and equipment
- The lease and lease-related documents
- A list of the loans against the business (amounts and payment schedule)
- Copies of any equipment leases
- A copy of the franchise agreement, if applicable
- An approximate amount of the inventory on hand, if applicable
- The names of any outside advisors
Get In Touch
How do you value a business?
We take multiple important elements into account when determining the price of a business. We fully review historical financials, cash flow, asset and equipment values, condition of the premises and lease terms, location of the business, competitors and the economy before finalizing the sell price. We also take into consideration the recent transactions of similar companies – both ones we have represented and transactions outside of our brokerage through paid data sources.
Why buy a business when I can start my own?
Many small businesses fail within the first year or two after starting up. By purchasing a business that is already up and running, you are eliminating many of the risks associated with a failing business. An established business has a proven track record, a proven/vetted business model, a customer base, trained and experienced employees, and most importantly, positive cash flow for the new owner. The risk is lower, and often times the growth is accelerated with these fundamentals already in place and with a new owner coming in with fresh ideas and new energy. Plus you’ll start off in month 1 with a positive cash flow and able to draw an income, whereas most new businesses take a while to build up enough business to generate a substantial income for the owner.
What portion of the sale will the seller refinance?
This varies with each seller. Some are willing to finance a portion but most sellers are reluctant to finance much of the sale price. The terms or length of the financing period also vary.
This said, most transactions below $5.0mm will generally apply for an SBL-backed loan to assist in the purchase of a business. This is a loan that is government backed and offered at competitive rates.
What is the difference between Profit (Net Income), Cash Flow and Discretionary Earnings?
This can be tricky because we’ve learned over the years that everyone’s definition of each of these terms can vary just a bit. Generally speaking, the profit of a business is the amount of money that is left over after all expenses are accounted for. The Cash Flow is the total amount of money being transferred into and out of a business. Cash flow considers not just a businesses profit, but also typically factors in other owners benefits, interest payments or interest received, depreciation, amortization, etc. It shows how much cash the business is producing which could be different than it’s profit from normal operations. Discretionary Earnings are owner benefits, EBITDA and all expenses that are not applicable to the new owner. For instance, the owner may currently have a more expensive office than you plan to have, or may be leasing a vehicle that you do not plan to use, or other expenses that are not applicable to you should you buy the business. Again, this definition can vary from one person to another.