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Selling a business 3 min read

Ingredients for a successful business transition

Deciding to move on is just one piece of the often-complex puzzle an owner needs to solve as they embark on a mergers and acquisitions process.

As an owner, when and how to exit your company is among the most important—and likely most daunting—decisions you will ever make. Selling a business through an mergers and acquisitions (M&A) process presents a wide array of new and probably unfamiliar challenges, from finding the right buyer and negotiating the right price to managing the tax, legal and long-term financial implications of a (hopefully) significant liquidity event.

Yet, for many owners, a more intangible impact of selling induces the most uncertainty: “A lot of the owners we work with are founders—they created their business from nothing,” says Jeremy Bloy, Assistant Vice-President, Business Development at CWB Commercial Banking, whose role includes supporting a roster of CWB clients and onboarding new ones. “So while they might recognize it’s time to sell and they need to understand it as a business transaction, it’s also an emotional decision for them. And it’s one that can take some time for them to come around to.”

When a business owner is considering selling—and facing the many challenges and uncertainties that prospect presents—CWB can help. That support often begins with conversations between the business owner and business banking experts like Bloy.


A trusted guide

As the main point of contact at the bank for his clients, Bloy helps guide them through the initial steps involved in selling a business, which depend on the complexity of the company and the goals of the owner. Some hope to exit the business entirely and move on to the next stage of their career or into retirement. Others have a strategic goal—for instance, to tap the equity they have built in the company to raise cash and “take the company to the next level,” Bloy says. Still others see a partial sale (perhaps to a private equity firm or employees) as a step towards a full exit that allows them to remain involved with the company and, hopefully, increase its value before they retire.

Once goals are established, the CWB team can help identify what the owner needs to do to prepare for a sale. That may include a business valuation process to give the owner a clear idea of what the company is worth.

In some cases, the company’s asset mix might need to be changed. For example, many business owners hold real estate within their companies, but dividing such non-active assets from those directly related to business operations can make a sale more efficient (from a buyer’s perspective) and help ensure the sale proceeds are eligible for a long-term capital gains exemption (from a tax perspective). An owner may wish to reorganize the company’s corporate structure or establish a family trust to facilitate a sale or maximize tax efficiencies. As well, operations or corporate record-keeping might need to be improved to make the company more attractive to a buyer.

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Managing the ‘moving parts’

Meanwhile, on a personal level, the owner may need to incorporate the sale’s impact into their wealth, retirement and succession planning.

Simply put, “there are a lot of moving parts involved with selling a business,” Bloy says. And that’s where CWB’s holistic approach to supporting business owners kicks in. Like other relationship managers, Bloy can connect clients with the advisors they need both within and outside the bank. For instance, an owner might need support from other experts at CWB to help improve cash flow or, on the personal banking side, advisory services from CWB Wealth to help with wealth and estate planning. Meanwhile, CWB can help clients get support from external legal, tax, valuation and other advisory services, including through the bank’s partnership with Sequeira Partners, a boutique transaction advisory firm.

Getting the right help early on can make all the difference between a successful business exit and one that leaves the owner disappointed, says Bloy. That’s why he encourages his clients to discuss their exit plans with him early and often. After, he explains, most owners need plenty of advance planning and sound advice to fully prepare for a sale. And support from CWB can go a long way towards resolving the uncertainties and fears that selling a business inevitably creates. “The sooner you start talking about it,” Bloy says, “the sooner you start planning.”