Here are several time-tested tips that every seller should keep in mind when selling his/her business. These by far are basic that apply to every business for sale.

Realistic asking Price

Do not overprice or underprice your business. If you price too high you will scare away qualified buyers. When overpriced, many buyers will not make you an offer for fear of offending you. The longer your business is on the market, the greater the chance of your employees, suppliers and customers finding out. Look for comparable sales and price accordingly.

Information Package

Prepare a ‘business information offer’ package, which includes all the information that buyers need to see. Examples are, Current Leases, List of Chattels included, Profit & Loss Statements, special exclusive benefits to the business, etc. Buyers will lose enthusiasm waiting for these items to be produced.

Spring Cleaning

Bring outstanding maintenance up to date before putting your business on the market. Conduct a ‘spring cleaning’ of the business so that everything is up-to-date. When buyers see items that need fixing, they often wonder about the condition of things they can’t see.

Legal & Accounting Info

Gather all information that’ll be needed to prepare a Purchase & Sale Agreement a.s.a.p., in fact even before looking and finding a buyer. It’s helps put a deal together in a timely fashion when data is readily available. Lawyers are often very slow in preparing agreements and the buyer’s enthusiasm may evaporate as a result of delays.

Marketing

Looking for qualified buyers has become complex and at the same time easier to looking for ready buyers in a wider area. Days of simply depending on newspaper leads are a thing of the past.  A limited number of people look at newspapers for a source of suitable business advertised for sale. Casting a wider net coupled with market value pricing is the way to get many more qualified buyers.

Qualified Buyers

It is very important that all interested Buyers be run through a ‘qualifying ‘ test. You need to know about the financial strength and business skills of potential buyers before you provide them with highly sensitive information about your business or spend your precious time with them. 

Franchise Agreements and other undertakings

Ensure that you have the blessings of the Franchisor and your Landlord – ensure that all your Agreements and undertakings allow for the Sale and easy transition of the business to a Buyer. Make sure that your location and equipment leases are transferable before you look for a buyer. Many deals have fallen apart because the lessors refuse to assign a lease. If your remaining lease is short, negotiate a new lease before offering the business for sale.

Accepting Conditional Sales

It is imperative that you agree on the sale price and terms/conditions with the purchaser before providing access to any of your proprietary data and financial records. It is extremely important that a buyer have ample opportunity to examine all aspects of your business and that you make all the required disclosures. These steps help both sellers and buyers to avoid lawsuits.

Confidentiality Agreements

Ensure that you have properly drafted and executed Confidentiality Agreemens from the Buyer before releasing pertinent operational information of your business. This will ensure that you are not being infiltrated with Buyers actually looking to open a competitive business of their own across the street from you. 

Everything in writing

All agreements and undertaking must be done in writing only. There should not be any verbal undertakings. Parties to the transaction quickly forget things that aren’t written down, resulting in arguments and lawsuits.

Substantial deposits

Ensure that there are substantial deposit with the Agreement. When you have reached an agreement with a buyer, the deposit should be held by a neutral Trust Account – preferably your Lawyers Trust Account to limit your liability.

Financing

It is preferred that the Buyer arrange suitable Financing if necessary. If you are taking-back a Mortgage or Financing part of the sale, be sure to follow the correct procedures in order to protect your promissory note. Your Lawyer will be able to ensure that proper document filing and executions of any necessary promissory notes and security agreements are in place.

Realtors

Businesses are sold and/or bought by Business Brokers and Commercial Realtors. The Buyer and Seller will recognize the value of the information and experience a Qualified Commercial Realtor can bring to the table despite the commissions payable to the Realtor. 

Toronto Real Estate Realty understands the continuing economic downturn in the last quarter of 2023. We understand that business sellers are seeing less public spending and banks tightening financial lending. The picture isn’t rosy.

To help sellers save against financial ruin, we encourage them to take part in the selling process. This will help save of selling Commissions.We are happy to discuss otions available to you.