How to sell a business in Canada

1. Start earlier than you think

Most private company sales in Canada take 6 to 12 months from the day an advisor is engaged to the day the deal closes. Getting the company ready takes longer, and it is the part that decides the price.

Buyers pay for a business that runs without its owner, keeps its customers, and can prove its numbers. They discount the opposite. The discounts that come up most often:

• Owner dependence. If the customers, the suppliers and the staff all deal with you, a buyer is buying a job, and they price it that way.
• Customer concentration. 1 customer at a quarter or more of your revenue is a risk the buyer will want covered, either with a lower price or with part of the price held back until that customer stays.
• Numbers that need explaining. Year-end statements prepared by an accountant for the last 3 years, and a clean line between what the company spends and what you spend.
• Nothing written down. Processes, contracts, leases and employment agreements that exist only in someone’s head do not transfer with the keys.

Every one of these takes a year or more to fix, which is why the owners who get the best outcomes start 2 to 3 years before they want to leave. If you want a quick read on where you stand, the buyer readiness scorecard asks 10 questions and takes 2 minutes, and the readiness checklist runs the 2 to 3 years backwards from the sale.

You will have company. The Canadian Federation of Independent Business estimates that 76% of small business owners plan to exit within 10 years, that over $2 trillion in business assets will change hands as they do, and that only 9% have a formal written plan for it.

2. Decide what kind of sale you want

There is more than 1 way out of a company, and they do not attract the same buyers or use the same advisors.

• Full sale. You sell the whole company and hand over the keys, usually after a transition period agreed up front.
• Succession or family transfer. The business stays in the family. The hard parts are price, fairness between siblings, and tax. The guide to family business succession goes through all 3.
• Management buyout. The people already running the company buy it from you, often paid over several years out of the profits.
• Partial sale or recapitalization. You sell a stake, take money off the table and keep running the business, often with a second sale in mind a few years on.
• Merger with a strategic buyer. A competitor, supplier or customer who wants what you have built, and can often pay more for it because of what it is worth to them.
• Asset sale or orderly wind down. When there is no buyer for the whole company, you sell the parts that have value and close the rest cleanly.

You do not need to have decided before you speak to anyone. Most owners have not. But the answer shapes everything that follows, so it is the first thing a good advisor works out with you. The home page describes each of the 6 in a little more detail.

3. Build the team

3 professionals do the work of a sale.

Your accountant prepares the numbers a buyer will see, normalizes your earnings by adding back the expenses that belong to you rather than the business, and plans the tax. Start with them, and start early, because the biggest tax planning points need 24 months of lead time. Section 5 explains why.

A lawyer with transaction experience drafts and negotiates the agreements. Your family or corporate lawyer may not be the right person. Ask how many company sales they closed last year.

An M&A advisor or a business broker runs the sale itself: prepares the materials, finds and approaches buyers, runs the negotiation and manages the process to close. Which of the 2 you need depends mostly on the size of the company, and the guide to brokers and M&A advisors sets the 2 side by side.

Business brokers usually list smaller businesses and market them broadly, the way a house is listed. M&A advisors run a confidential process for companies with $1 million or more in revenue: they prepare the business, approach chosen buyers directly, create competition between them, and negotiate on your behalf. For a company of that size the difference in outcome is usually far larger than the difference in fee.

What to look for in an advisor:

• Deals closed at your size and in your sector in the last 2 years, not 10.
• The kinds of buyers they would approach for you, and why, before you have signed.
• Their fee, in writing, before they start.
• No price promised before they have seen your numbers.

4. Understand what a buyer pays for

Nobody can tell you what your company is worth from a web page, and anyone who offers to should worry you. Value is set by what a buyer will pay, and buyers price 4 things.

1. Earnings. Usually normalized EBITDA: earnings before interest, tax, depreciation and amortization, adjusted for owner pay above the market rate, personal costs run through the company, and anything that happened once. Buyers pay a multiple of this figure, and the multiple depends on the next 3 items.
2. Risk. How much of the earnings depend on you, on 1 customer, on 1 supplier, or on a lease that runs out next year.
3. Growth. Whether the earnings are rising, flat or falling, and whether the buyer can see how to grow them.
4. Transferability. Whether the business can be handed over: systems, staff, and contracts that survive a change of owner.

Your advisor will give you a realistic range once they have your numbers, and then the market tells you the rest. A well run process with several interested buyers is the most reliable way anyone has found to reach the top of that range.

5. Share sale or asset sale

This is the decision with the biggest tax consequences, and it needs to be planned years ahead.

In a share sale the buyer purchases the shares of your corporation, and everything in it comes along: contracts, employees, liabilities and history. Sellers usually prefer it, because of the lifetime capital gains exemption described below.

In an asset sale the corporation sells its assets, meaning the equipment, the inventory, the contracts and the goodwill, and you are left holding a company with cash in it. Buyers usually prefer it: they choose what they take, leave the liabilities behind, and get a higher tax cost on what they buy. Your corporation pays tax on the sale, and you pay tax again when you take the money out, so the total bill is often higher.

The lifetime capital gains exemption

If your shares are qualified small business corporation shares, each individual shareholder can shelter up to $1.25 million of capital gains from tax over their lifetime. The limit was raised to $1.25 million for sales after 24 June 2024 and is indexed to inflation from 2026, which puts it at $1,275,000 for 2026. 3 tests have to be met:

• At the time of the sale, at least 90% of the company’s assets, by fair market value, must be used in an active business carried on primarily in Canada.
• For the 24 months before the sale, more than 50% of the assets must have been used in an active business carried on primarily in Canada.
• The shares must have been owned by you, or by someone related to you, for the 24 months before the sale.

That is why timing matters. A company that has built up cash, investments or a rental property inside the operating business often fails the 90% test, and moving those assets out cleanly can take up to 2 years. With the right structure set up years in advance, more than 1 family member may be able to use their own exemption. All of this is accountant and lawyer territory, and none of it can be done in the month before a sale. The guide to share sales and asset sales goes through the whole decision.

Half of a capital gain is taxable in Canada. A proposed increase to that inclusion rate was cancelled in March 2025.

2 other points come up in almost every deal. In a share sale your employees carry on as before. In an asset sale they are usually let go by your company and rehired by the buyer, which brings provincial employment rules into the negotiation. And if a buyer wants an asset sale and you want a share sale, the gap is usually bridged with price, so know what the exemption is worth to you before you sit down.

6. The process, step by step

Once an advisor is engaged, a managed sale runs through 7 stages.

1. Preparation. 4 to 8 weeks. The advisor works through your numbers, normalizes the earnings, agrees a strategy and a target buyer list with you, and assembles the documents a buyer will ask for.
2. Materials. A 1 page anonymous teaser that describes the company without naming it, and a confidential information memorandum for buyers who sign a non-disclosure agreement.
3. Buyer outreach. The advisor approaches the chosen buyers directly and confidentially: strategic buyers in your industry, private equity groups, family offices, and sometimes individuals with financing behind them. Your name is released only under the agreement.
4. Indications of interest. Interested buyers submit a price range and outline terms. The advisor narrows the field, and you meet the shortlist.
5. Letter of intent. The chosen buyer sets out price, structure and conditions. The price is not binding, but the letter usually grants exclusivity, commonly for 60 to 90 days, so it is the moment your leverage peaks. Settle the hard points here, not later.
6. Due diligence. 30 to 90 days. The buyer’s accountants and lawyers examine everything: financials, tax, contracts, employees, property, litigation. Expect hundreds of questions. A prepared company answers them quickly. An unprepared one watches the price fall.
7. Definitive agreement and closing. The lawyers negotiate the purchase agreement, the representations and warranties, the indemnities, the non-compete and the transition terms. Funds move at closing, and you begin the handover you agreed, commonly a few months to a year.

Deals often include money paid later: an earn-out tied to future results, or a vendor take-back, where you lend the buyer part of the price and are repaid over time. Both move risk from the buyer to you, so treat them as part of the price rather than an afterthought.

7. How long it takes

6 to 12 months from engagement to close is the norm for a private company sale in Canada, and 4 to 6 months is fast. What makes it longer: a business that dips during the process, tax planning that should have happened 2 years ago, a single buyer with no competition, and slow answers in due diligence. Add the preparation before an advisor is engaged, and the honest answer for most owners is that a good exit is a 2 to 3 year project. The guide to how long a sale takes puts the weeks against each stage.

8. What it costs

An M&A advisor is paid mainly by a success fee: a percentage of the sale price, agreed in writing before they start, which usually steps down as the price rises. Some charge a monthly work fee during the process, often credited against the success fee at close. Legal and accounting fees are on top, and vary with the complexity of the deal. Every fee should be in the engagement letter before you sign anything. The full breakdown of what a sale costs works through each line with the scales and 3 worked examples.

Our introduction costs you nothing. The advisory firm pays us for it, the same way an employer pays a recruiter, and your fee with that firm is the ordinary fee they charge every client.

9. Mistakes that cost owners money

• Telling staff and customers too early. Confidentiality is the reason the process is run through an advisor rather than a listing.
• Taking the first offer. 1 buyer is not a market. Competition, or the credible threat of it, is what sets the price.
• Letting the business slide. Buyers reprice on the latest numbers. Run the company as if you were keeping it until the money lands.
• Leaving tax to the end. The exemption tests run over 24 months. They cannot be met in a hurry.
• Skipping the handover. A buyer who believes the business depends on you holds back price until you have proved otherwise. Plan to stay through the transition, and price it in.
• Choosing an advisor by the number they quote you. The figure that matters is the one a buyer signs, not the one used to win your engagement.

10. Questions owners ask us

11. Where we fit

Sell My Company is a finder. Owners of Canadian companies with $1 million or more in revenue tell us 4 things, and we introduce them to 1 vetted Canadian M&A advisory firm that has closed deals at their size in their sector. 1 introduction, never a list. It is free to you at every stage, because the advisory firm pays our fee.

We do not value your company, prepare your materials, approach buyers or negotiate on your behalf. We make the introduction and step back. If you are years away, take the scorecard. If you are ready to talk, tell us 4 things.