Here is a typical case: Claude, after having founded a good company and having it grow for the last thirty, forty years, is about to retire. But here’s the difficulty: Claude has no succession or buyer. Claude may therefore have to liquidate his business and, at the same time, see the bulk of his capital fly away. All things considered, it’s Claude’s problem, is it not?

But don’t forget the fate of Paul, Michele, Samuel, Mustafa and the dozens of Claude’s employees, who will see their job disappear. As a result, they will not only lose their source of income, but a large part of their social life.

This is the fate that threatens some 38,000 companies over the next ten years. [I] Beyond individual misfortunes, it is the very stability of our economy that is at stake.

Meanwhile, the new generation has never been so attracted to entrepreneurship. According to the Entrepreneurial Index of Quebec, developed by Network M, entrepreneurial intentions tripled between 2009 and 2016. [ii] In 2017, women were almost as numerous as men among young people and new entrepreneurs, testifying to a significant progress towards parity. [iii]

In this context, there is no reason why the majority of established businesses cannot be saved. But for this to happen, new entrepreneurs need to consider taking over an existing business as an attractive alternative to founding a new business.

Get your “affairs” in order

The owner who wishes to avoid having to liquidate their business must first make sure that it is attractive to a potential buyer. To do this, we must ensure that its financial statements reflect their true value. Those who choose strategies to limit profits to avoid paying a big tax bill will have a harder time than owners who can demonstrate, with numbers, that their business is profitable.

It is also necessary to help a prospective purchaser to properly assess his risk. Like any investor, this acquirer will want as much as possible to limit their risk and make sure to make their investment profitable. The seller will want to be prepared for the inevitable burden of due diligence. Remember that this stage is where the buyer reviews the financial and legal situation of the company. The buyer will want to confirm that the business is duly incorporated, that it owns its assets – that it has fulfilled all its legal and contractual obligations, in short. Risking subjection to a series of lawsuits and seizures the day after the sale, the seller will have every interest in working with his business lawyers to prepare the ground.

Finding your Ideal Buyer

The business may be in a good financial and legal position, but if no one knows that it is for sale, it can be difficult to find the right buyer. But wait! You should think twice about shouting from the rooftops that you want to sell your company. It is important to think about the reaction of customers, employees, suppliers and competitors, not to mention that of the bank.

Different avenues are offered to the seller. Among these, the use of a business law firm is a solid and discreet choice. The business lawyer, through his contacts, can put you in touch with a potential buyer. He may also approach a company active in your industry to sound out his interest in making an acquisition. In this way, the seller can make anonymous contact with a competitor, without the latter knowing the identity of the selling company before making a formal commitment to ensure the confidentiality of the talks.

Sometimes, we search far and wide for what is right before our eyes. You should consider that your best buyers might be your own employees. After all, they know your business almost as well as you. And by acquiring their place of employment, they make sure to keep their jobs.

It can be with one of your key employees, or even your executives, but the negotiation must be conducted with tact and diplomacy. Your business lawyer ought to be a seasoned negotiator benefitting from a hindsight that the founder of the company may simply not have.

You should not dismiss other employees as potential buyers. Through modern forms of organization, such as employee shareholder co-operatives, your employees can spread the financial risk among themselves, while building governance that can respond with the flexibility needed to manage the business.

Under certain conditions, it is your customers who could be your best buyers. Through other forms of co-operatives, such as beneficiary co-operatives, they can buy your business to ensure they can continue to receive the services.

Your business lawyer can help you think through a variety of scenarios so you can find buyers who can best appreciate the value of your business.

For the Buyer

The entrepreneur who wants to acquire an existing business obviously benefits from the fact that it already has a place in the market. In doing so, the buyer can move much faster than if he had chosen to create any part of a new company. However, we must avoid being deceived by appearances or blinded by a lack of verification. Here, a healthy dose of doubt can save you a lot of trouble.

Your business lawyer will help you ask the right questions: Who is the true owner of the assets used in the business? Will these assets be free of charge in the transaction? Who are the key employees? Are they related to the company by a written contract containing a valid clause of non-competition and non-solicitation? What are the relationships between the company and its suppliers? Has the company had to recall products or is it likely to have to do so? There are many other questions that your business lawyer will ask to help minimize any mystery surrounding your purchase.

An Advantageous Solution, When it is Well Done

Whether for the seller who wants to realize the full value of the accumulated capital in the company, the buyer who wants to quickly become a leader in the industry or the workers who want to preserve their source of employment, the buyer makes up a profoundly important part of a business acquisition. To succeed, nothing can replace preparation and professional work and

This is where you will benefit from seeking the services of an experienced business lawyer.


[i] Charest, Mathieu, « 38 000 entreprises cherchent repreneurs », dans Les Affaires, 19 mai 2017.

[ii] Ibanescu, Mihai et al. Croissance et internationalisation : les quatre profils de l’entrepreneur québécois sous la loupe. Indice entrepreneurial québécois 2016 du Réseau M., 2016.