Transition Planning 2nd Edition

DOES YOUR BUSINESS MEET THE LOW RISK
CRITERIA THAT BUYERS SEEK?
There is a wide range of issues involved in selling your business. If your
business is perceived as higher risk due to contract disputes or legal
claims; then buyers will prefer to make an offer based on an asset sale.
Below is a summary checklist of what buyers / investors will seek out
during the due diligence phase:
4 A consistent trend of increasing sales and profits over many years
4 Dominant market share in its trade area
4 A diversified customer base
4 Excellent receivables management
4 Good banking credit and payables history
4 Low employee turnover
4 More than adequate working capital
4 Financial ratios compare favourably with other industry averages
4 Financial statements prepared either in Notice to Reader, Review
Engagement or Audited statements
4 Recurring revenue from established clients and sales channels
4 Business Plan and strategies for growth that are up to date
“
Without advice plans go wrong, but with
many advisors they succeed.
- Proverbs 15:22
“
4 Revenue spread across a wide range of clients
4 Low bad debt ratios
4 Human resources policies and procedures
4 No current legal claims against your business
4 Senior management in place
If your business can demonstrate under due diligence that there is little
or no risk involved; then a share sale is a higher probability. The main
benefit to a share sale is that each stakeholder is entitled to the Capital
Gains Exemption (CGE) which provides up to $900,000 tax free.
PAVILION DELIVERS
EXCEPTIONAL RESULTS
Working together to serve the
common purpose of the clients goals.
INTEGRITY • AGILITY •RESULTS 21