Best Toronto Broker to Sell my Business

Edited by Admin
Best Toronto Broker to Sell my Business

Planning to sell your business is something potential sellers should start doing well in advance of the actual sale. This is an ongoing process and a good business owner/entrepreneur will build a business which is ready for sale, even in case of an unsolicited offer. Planning should take place at least three years prior to the anticipated time you want to sell. You have to consider tax implications, changes to shareholdings, employee stakes and the overall direction of the business.

 

The first step in preparing a business for sale is to ensure that the business can operate independently without high owner involvement. Owners must create a structured approach and train employees to handle operations in their absence. The next step is to manage working capital and make sure that the business holds an optimal amount of inventory with an adequate turnover. Businesses that have trouble collecting receivables and operate on a negative cash flow cycle often deter buyers. It is important to make sure that the business is generating strong positive cash flow. This can be done by renegotiating contracts and credit terms. Another important factor to consider is tax and real-estate planning. Seeking help from professionals for this purpose can go a long way in generating tax concessions and in reducing income tax liabilities during the sale.

 

From a financial standpoint, other than the obvious top line growth, it is important to manage expenses in the years leading to the sale. Highly variable expenses with no significant effect on the top-line can be a sign of poor management. If the business experienced a recent drop in sales, it is advisable to defer the sale and focus on strong revenue and cash flow generation so that the valuation can be backed by hard facts.

 

Finally, on the administrative side, it is important to start organizing paperwork and documenting procedures to make sure the business is clearly mapped-out for potential buyers. Make sure that a detailed documentation of financials, FF&E, property, legal contracts, business contracts and any other paperwork particular to the business is maintained and properly formatted for buyers and professional advisers. This will expedite the transaction process and increase your chances of selling at a higher multiple.