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Buy or Sell a Business
Planning to Sell a Business?
The Business Sales Market in Ontario, CanadaSearching the business for sale listings online can be a very trying experience – especially for those who are unaware how difficult it may be to find a good business for sale.
The market to find an existing company to purchase in Ontario is quite illiquid, relatively speaking. For example, in the real estate market there exists a central clearinghouse for real estate listed with a brokerage – the multiple listings service (MLS). Most businesses for sale, however, are not listed on the MLS (for some good reasons) so the same efficiency in the business re-sale market does not exist unfortunately.
This article will look at some reasons why most businesses listed with a business broker are “exclusive listings” and why the business re-sale market is not as liquid as the real property market.
Business brokers take on ‘exclusive’ listings
Selling a business through a business brokerage usually means signing on with the brokerage with an ‘exclusive’ listing and not a ‘multiple’ listing. The main difference is that an exclusive listing is listed with a specific brokerage and the information does not get shared with the other brokerages that are a part of the local board. Also, most business brokers do not “co-operate” with other brokers or agents. That means that they take on the full responsibility of finding the buyer for the business they are selling and do not pay out partial commissions to other agents. As a business owner, you may think that this does not make a whole lot of sense. There is, however, very good cause for the way things are done.
Selling a business through an exclusive listing
Business brokers take on exclusive business listings for a variety of reasons:
- Selling a business requires a specific skill-set and knowledge base that other agents do not possess.
- A business sale must be “win-win” and the role of the business brokerage professional must be that of the neutral deal maker. Introducing another agent would minimize the ‘win win’ mindset and bring on a confrontational perspective
- A business broker must be an advocate for the deal. Buyers and sellers expect the neutral intermediary to work closely with their advisors in order to nurture the deal.
- Selling a business requires detailed knowledge of that business. A “buyer’s agent” would not necessarily have the depth of knowledge about the business and that could create a disservice to both parties.
For these reasons, it truly is a better scenario if the business intermediary is “exclusive” and represents both parties in the transaction. The downside to this is that this precludes listing a business for sale on the MLS (or similar) system. Business brokers then must rely on their own advertising and marketing skills to generate awareness that a company they represent is being sold.
Marketing a company that is looking to be sold is usually done online but also through a business broker’s own sphere of influence, personal networking, database marketing and sometimes traditional mediums such as newspapers or magazines.
Marketing a business for sale in Toronto, Ontario can be slightly easier than in smaller centres across the province since there are many websites and trade publications within the GTA that cater to several different niches.
