Part 1: Preparing Your Business for Sale in Canada: Essential Foundations From the Globe and Mail (Part 1/2)
Selling a business is one of the most significant decisions an owner can make, and proper preparation is the key to maximizing its value. With interest rates stabilizing after years of economic fluctuation, now may be an opportune time for Canadian business owners to consider selling.
However, the process can be complex, and ensuring your business is in top shape is critical to attracting the right buyer and securing the best deal. The Globe and Mail’s Chris Warner and Simran Arora just released a comprehensive list of tips to prepare your business for sale. Part 1/2 of this series outlines some of these tips for business owners. Fill in the form below to receive the full Globe and Mail article to your inbox for free!
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Here Are the Foundational Steps Every Business Owner Should Take When Preparing For a Sale:
1. Build a Lean, Sale-Ready Business
Buyers are looking for businesses with strong profitability and steady cash flows. To achieve this:
Keep spending tight and debt levels low.
Try to diversify your customer base to avoid reliance on a few key clients.
Focus on operational efficiencies that demonstrate your business's ability to maintain profits over time.
A lean business signals stability and growth potential—key factors in valuation.
2. Prioritize Recurring Revenue
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Recurring revenue streams are particularly attractive to possible buyers. Unlike one-off sales, subscription-based or repeat revenue models create predictable and reliable income. They show that your business has strong customer loyalty and has built a dependable financial foundation.
If your revenue isn’t set up like this, consider introducing subscription models, maintenance packages, or other ways to build consistent cash flow.
3. Clean Financials Attract Clean Offers
One of the first things buyers will review is your financial reporting. Detailed, accurate, and well-maintained records are critical in establishing trust and transparency.
Aim to have at least three years of audited financial statements available.
While many private companies use Accounting Standards for Private Enterprises (ASPE), International Financial Reporting Standards (IFRS) are often preferred for their solidity and comparability.
Comprehensive financial documentation reassures buyers and can help you negotiate from a position of strength.
4. Highlight What Makes You Stand Out
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In a crowded market, being able to stand out is crucial. Think about what sets your business apart:
Unique product or service features.
Market share or customer demographics.
Efficient distribution networks.
Invest in market research to showcase how your business outperforms competitors. This clarity can make your company more appealing and boost its perceived value.
5. Invest in Assets and Processes
Turn-key businesses — aka those that are ready to operate seamlessly without significant investment—are more attractive to buyers. This means:
Keeping equipment, facilities, and technology up to date.
Streamlining processes and implementing systems that ensure operational efficiency.
Buyers want confidence that they can step into a well-oiled machine without the need for costly improvements.
Time to Take the Next Step
Preparing your business for sale takes time, careful planning, and strategic investments. By focusing on these foundational areas, you can ensure your company is attractive to potential buyers and well-positioned for a successful sale. Ideally think 3-5 years before you might actually want to sell.
At Malahat Valuation Group, we specialize in helping Canadian business owners navigate the complexities of preparing to transfer ownership of their companies and become buyer ready. From business valuations and appraisals, to Employee Ownership Transfer counsel, our expert team is here to guide you every step of the way.
Stay tuned for Part 2 of this series, where we’ll explore advanced strategies to maximize your business’s value during a sale.
Malahat Valuation Group specializes in business valuation and real estate appraisals to owners of privately owned companies and their professional advisors.
When owners need to leverage, sell or reorganize their assets, we answer the age-old question "What is it worth?".
We provide our clients and their advisors peace of mind by preparing professional valuations that stand up to scrutiny from lenders, the Courts, and the Canada Revenue Agency.
Malahat Valuation Group Inc.
(250) 929-2929
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