Business Broker Canada

M&A, Business Brokerage & Real Estate  

The Canadian business brokerage industry is in its infancy compared to the US but the growing number of business owners looking to retire over the next decade suggests that business brokerage in Canada is a service that will have increasing demand. 

Not many people know what a ‘business broker’ in Canada can do to help sell a company or how the profession differs from mergers & acquisitions or even commercial real estate.  There are similarities but also some important distinctions to point out.

How business brokerage in Canada compares to M&A
Ultimately, the objective of business brokers in Canada and M&A firms is to consummate deals.  Business brokers and merger & acquisition advisors bring together buyers and sellers, assist with negotiations and foster a mutually agreeable deal for their clients. 

One of the more important distinctions though is in regards to deal size.  Most business brokers in Canada will work deal sizes up to $5 million in value while only very small M&A firms work in that deal space.  There is some overlap though and it is sometimes a judgment call whether a professional firm or a business broker would be better to serve a particular client.

In some instances, intermediaries go from working in the M&A field to working for themselves as a business broker, and vice versa.  The skill sets are very similar so this does occur, especially near larger financial centres such as Toronto.

Business brokerage and the real estate profession
Most people think that ‘business brokers’ or ‘business intermediaries’ are a distinct subsection of the real estate profession.  The truth is that realtors and those that focus on selling businesses in Ontario are governed under the same statute, the Real Estate & Business Brokers Act, 2002.  In fact, it is the exact same licensing and registration process to sell a business, home, commercial building or piece of real estate. 

There is no provision in the Act that stipulates that a professional who sells businesses must have a certain level of education or know-how but in reality a person should have a certain level of skill in order to successfully know how to sell a company.  The common nomenclature for real estate professional who sells businesses is often referred to as “business broker” just as “real estate agent” is often used for those that sell houses or buildings.  The preferred terminology is sales representative, salesperson or broker – depending on their registration. 

Most business brokers work for a large real estate brokerage with a brand name.  Some focus exclusively on the sale of businesses and other take on commercial or some residential clients as they come up.  For most business sales though, some conveyance of real estate usually happens (either a sale or lease assignment of some sort) so as a matter of practicality, the license to trade in real estate is certainly a benefit to the client.

Would you need a business broker in Canada?
If you own a small or medium-sized business in Canada, valued at approximately $5 million or under you might want to consider using a business brokerage professional.  This rule of thumb would certainly apply to businesses such as manufacturing, construction, distribution or technology where the comfort zone of a realtor may not be sufficient.  On the other hand, businesses such as convenience stores or restaurants are often successfully sold by realtors with a very good success record, depending on the individual.  However, a business broker being a specialized professional for this trade you can probably look at a much smoother and better process.

Steve Skrlac, MBA is a business brokerage professional with Coldwell Banker, Pinnacle - which is a part of the Coldwell Banker Canada organization.  Steve deals in purchases & sales of companies values at $5,000,000 and less.