Sell your BC business to the right buyer

Who is buying BC businesses

Mostly three kinds of buyers. Private equity groups buy established, profitable businesses and often keep the management and staff. Long-term holding companies and family offices buy to hold, sometimes for good, and care a lot about the people and the reputation.

Individual buyers want to own and run a business themselves, usually a smaller one. Each looks at a business differently, and each has a different idea of a fair price.

Many of the buyers I talk to want businesses where the owner is thinking about retirement or has no one lined up to take over. That’s common in BC, and many buyers are looking for exactly that.

Where the real estate side matters

Almost every business sale has real estate in it, and it’s where a lot of sales get stuck. It’s also my day job. These are the ones I see most:

• Lease assignment. In most sales the buyer takes over your lease, and that needs your landlord’s consent. A complete package for the landlord, sent early, saves weeks.
• Term left on the lease. A buyer and their lender want enough years to make the purchase work. If you only have a year or two left, negotiating an extension or a renewal option before the sale can add real value.
• Landlord consent and your release. Consent is one thing. Getting you, and your personal guarantee, released from the lease after the sale is another, and it’s worth asking for.
• Owning vs leasing the property. If you own the building, you have two things to sell. Some buyers want both, some want the business and a lease from you, and some only want one. Each changes the price and who’s interested.
• Relocation. Sometimes the space doesn’t suit the buyer, or the building is being redeveloped. Sorting out a move, or a plan for one, before the sale keeps the deal from wobbling.

How I work on a sale

Any work I do on a sale is through Coldwell Banker Prestige Realty and set out in writing before we start, including how I’m paid. When a lease or property is part of the deal, BC real estate rules apply and protect you.

If your sale is a share sale with no real estate in it, parts of it may fall outside real estate licensing. I’ll tell you that up front and work alongside a lawyer and an accountant who do these deals.

Paperwork and rules for a business sale

• When a real estate licence applies. In BC, a business sale is a real estate transaction if it includes real property or a lease, or if 100% of the shares of a company that owns or leases property are sold. A sale of less than 100% of the shares, or a business with no property or lease, isn’t. See the BCFSA consumer guide.
• The package a buyer should see. At a minimum, an income statement for the most recent 12 months, a balance sheet, and a list of the fixtures and other assets that are not included in the sale. If those don’t exist yet, have your accountant prepare them before you go to market.
• Put the equipment and inventory list in the contract. Arguments about what’s included are common. Attach a schedule of every item that’s included, and name anything that isn’t.
• Goodwill needs proof. A buyer pays more than the net assets when they expect the business to earn more than similar ones, because of its customers, location or reputation. Clean records are how you show it.
• Employees’ service carries over. Under section 97 of the Employment Standards Act, when all or part of a business is sold, employment is treated as continuous. The buyer takes on each employee’s length of service, which affects notice and severance, and will price that in.

Questions people ask

How long does it take to sell a small business in BC?

For an established business with clean books and a good lease, six months to a year from the first conversation to closing is a common range. It can be faster when an interested buyer is already looking in your sector, and slower if the books, lease or management need work first.

What do buyers look for when buying a BC business?

Steady profit over several years, a business that can run without the owner, staff who stay, no single customer that is too big a share of sales, and a lease or property that can transfer with the sale.

Can I sell my business confidentially?

Yes. Early conversations can happen without naming the business, and buyers usually sign a confidentiality agreement before they see details. Staff, customers and suppliers don’t need to know until you decide they should.

Do private equity buyers keep the staff?

Many do, because the team is a big part of what they are buying. Ask any buyer directly what they plan for staff and management, and get the answer in writing where it matters to you.

What happens to my lease when I sell my business?

In an asset sale the lease is usually assigned to the buyer, which needs the landlord’s consent. In a share sale the company keeps the lease, but many leases treat a change of control like an assignment. Either way, ask for a release of your personal guarantee.