Most founders sell a business exactly once. The buyer across the table has usually done it many times. That gap (not valuation math, not lawyers) is what costs sellers the most money. This guide walks through the whole process the way it actually unfolds in Ontario, so the first conversation you have with a buyer isn’t also the first time you’re hearing how any of this works.
The best exits are set up one to three years before a sale process starts. Buyers pay for clean, believable numbers, and they discount everything else. If your books mix personal expenses with business ones, if revenue lives in spreadsheets instead of accounting software, or if the company’s biggest customer relationship exists only in your head, fix those things now. None of it requires a banker: it requires tidy books, customer contracts in writing, and at least one person besides you who knows how the business runs.
In Canada, a sale is structured as either a share sale or an asset sale. Sellers usually prefer share sales because of the Lifetime Capital Gains Exemption, which can shelter a substantial amount of the gain on qualified small business corporation shares from tax. Buyers often prefer asset sales because they cherry-pick what they take on. Where a deal lands between those two is a negotiation, and it changes your after-tax outcome enormously. This is the single best reason to involve an accountant early, before you’ve agreed on a headline price.
Ontario sellers generally find buyers through four channels: competitors and strategic acquirers who already know the business, business brokers and M&A advisors who run a process for a fee, online marketplaces, and direct approaches from investment firms and holding companies. Inbound interest is flattering, but a single-buyer negotiation is the weakest position you can sell from. Even two credible interested parties changes the dynamic completely.
Most small and mid-sized businesses in Canada trade on a multiple of SDE (seller’s discretionary earnings) or EBITDA. The multiple moves with how transferable the business is: recurring revenue, a management team that stays, low customer concentration, and documented processes all push it up. A business that stops working the day the founder leaves gets the low end no matter how profitable it is. If you want the deeper mechanics, we wrote a separate piece on how small businesses are actually valued.
A letter of intent (LOI) sets the headline price and grants the buyer exclusivity to do due diligence. Expect diligence to take six to twelve weeks: financial records, tax filings, contracts, employees, litigation, systems. Two things protect you here. First, disclose problems early: diligence exists to find them, and a surprise found late becomes a price cut. Second, watch the structure as closely as the number: how much is cash at closing versus earn-outs, vendor take-back notes, or holdbacks. A lower price paid fully in cash is often better than a bigger headline paid slowly and conditionally.
Closing itself is anticlimactic: signatures, funds flow, done. What surprises founders is what comes after: most deals include a transition period where you stay on for months, sometimes a year or two, and many include some form of ongoing tie to the business’s performance. Be honest with yourself about how long you’re willing to stay and in what role, and negotiate that explicitly rather than letting it default.
Price matters, but so does what happens to the thing you built. Strategic buyers often fold the company into their own operations; financial buyers vary from quick-flip models to long-term holds. Ask any buyer three questions: what happened to the last three businesses you bought, who from those teams is still there, and what do you plan to change in year one. The answers tell you more than the pitch deck does.
This article is general information, not legal, tax, or financial advice. Talk to your lawyer and accountant before signing anything.
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