The Process

Sale of business interests: through a real estate broker.

Licensed personnel: under the Real Estate and Business Brokers Act. Adhering to all disclosure protocols and governance of marketing and fiduciary ethics inherent in licensure.

Steps in the process:

1)      View prospectus data from licensed sales person.

2)      Mutual Non-Disclosure agreement usually weighted in strong favour of the disclosing party.

3)      Once Non-Disclosure understood and signed by appropriate individuals  -  in-depth financials are revealed to interested parties.

4)      If these prove to be of substantial interest to the purchaser, a formal offer to purchase with attendant clauses to protect the interests of all parties is drafted. A deposit amount is agreed upon (usually in the neighbourhood of 10%) and submitted payable to the listing brokers’ trust account to be held in trust until full and final release from the legal talent representing both sides is given to disperse appropriate deposit funds upon ultimate consummation of the transaction.

5)      If the offer to purchase is workable for all parties  -  all custom crafted, issue specific, clauses are deemed tenable, all caveats and provisions also are deemed by all parties to give grounds for further efforts; the ‘Due Diligence’ process begins. 

6)      Due Diligence includes but is not limited to: an accounting / legal process, where the articles of incorporation are inspected for possible liabilities to minority shareholders. A survey of all suppliers / customers is conducted. All leases or titles to real property are scoured to expose any weakness inherent that may befall the purchaser subsequent to completion of the transaction. All covenants are duly noted that are inherent in the corporation. The financial records such as they are, are gone over to the satisfaction of the respective auditors, all items of interest are noted: i.e. exposure to work-mans comp.  Corporate taxation issues. Human Resource issues (pension plan exposure – lay off costs as may be deemed useful and necessary to realize possible synergies). So that the purchaser is by now clear as much as possible of exactly what she/he is buying. Moreover any hidden or, possible future liabilities are exposed to the full light of day.

7)      The above represents the process if the transaction is for the purchase of the ‘Shares’ of the corporation. The process is somewhat different and less involved for the purchaser if the ‘Assets’ alone are being purchased. In substance this is the process either way. There are tax issues as well as legal issues that make this decision vital for both parties and need to be discussed with respective legal and accounting talent. Understanding that transfer of title to Shares or Assets will also have an impact on the bottom line price paid for the business interest.