Business transfer is a critical step in an entrepreneur's life. Whether it's to plan for retirement, reorient a career, or ensure the continuity of a family business, selling your company is a process that involves many steps and requires careful preparation.
In Quebec, the stakes are high: according to Repreneuriat Québec , approximately 50,000 businesses will need to be transferred in the next five years. However, more than 60% of transferors do not have a structured succession plan , which compromises the success of many transactions.
Here are the five most common mistakes people make when selling a business, along with practical tips and resources to help you avoid them.
Lack of succession planning
Common mistake: Postponing consideration of selling until urgent reasons require it (illness, premature retirement, family conflict, etc.).
Why it's a problem: A poorly planned transfer leads to depreciation of the business, loss of interest among potential buyers, and increased risks of closure. The sale process can take between 12 and 36 months , according to a BDC study on small business succession.
Solution: Initiate succession planning 3 to 5 years in advance . This allows you to structure financial statements, optimize internal processes, and identify a suitable successor, whether internal (employee, child, partner) or external. The TRNSFR platform offers free tools to begin this process independently and obtain an initial assessment of the situation.
Source: BDC Report on SME Succession – 2022
An overestimation of the company's value
Common mistake: Evaluating the company based on the effort invested over the years rather than on objective market data.
Why it's a problem: An unrealistic valuation turns off serious buyers, complicates negotiations, and can even damage the seller's credibility. A company's value is based on tangible factors like EBITDA , cash flow, assets, liabilities, outstanding contracts, reliance on a single person, and organizational structure.
Solution: Use a recognized valuation method (EBITDA multiples, DCF method, industry comparables). TRNSFR offers an estimation tool based on these methods, which can then be enhanced by a partner accountant or tax expert.
Source: Investissement Québec – Guide to the Next Generation
An incomplete or disorganized sales file
Common Mistake: Providing too little information or an unstructured package to potential buyers.
Why it's a problem: An incomplete file damages buyers' confidence. It can slow down due diligence and cause the deal to fall through. Buyers want clear data: financial statements from recent years, key contracts, HR structure, intellectual property, etc.
Solution: Create a professional and structured sales file , including all relevant documents. TRNSFR offers a certification process that validates the tax, legal, technological and marketing aspects of the company, to maximize the transparency and attractiveness of the file.
Source: RelevePME.ca – The transferor’s toolbox
Neglecting privacy management
Common mistake: Informing employees, customers or partners too early, without a legal framework or communication strategy.
Why it's a problem: It can lead to employee departures, loss of customer or supplier confidence, and damage the company's stability even before the transaction. Business transfers are sensitive and require discretion until the sale is complete.
Solution: Integrate a clear confidentiality process . TRNSFR automatically integrates non-disclosure agreements (NDAs) into its buyer-seller contact process. This protects both parties and regulates the flow of strategic information from the very first discussions.
Source: CPA Canada – Best Practices for Business Succession
Underestimating the time and complexity of the process
Common Mistake: Believing that simply “putting the business up for sale” will quickly close a deal.
Why it's a problem: In reality, less than 20% of businesses for sale find a buyer within 12 months of going on the market, according to data compiled by the Centre de transfert d'entreprise du Québec (now Repreneuriat Québec). The process is long: negotiation, verifications, financing, transition.
Solution: Embark on a structured and planned approach. TRNSFR offers modular support: the seller can begin independently, then integrate experts as the seller progresses. This allows them to maintain control over the pace and costs of the transaction.
Source: Repreneuriat Québec – Data on the succession market
In summary
|
Common mistake |
Potential consequence |
Proposed solution |
|---|---|---|
|
Lack of planning |
Rush sale, loss of value |
Start early with a free assessment |
|
Overestimation of value |
Blocking of the process, loss of credibility |
Neutral assessment based on reliable methods |
|
Incomplete file |
Buyer distrust, delays |
Certification of the file in stages |
|
Mismanaged Privacy |
Internal destabilization, loss of opportunities |
NDA integrated into the TRNSFR platform |
|
Unrealistic expectations about the time frame |
Frustration, transaction failure |
12 to 36 month planning, support |
Conclusion
A successful business transfer relies primarily on good preparation and the right tools . Whether you are the seller or the buyer, avoiding these five mistakes allows you to secure the transaction, maximize its value, and ensure the continuity of the business.
The TRNSFR platform was designed to support you through every step of this process, from the initial assessment to the completion of the sale, with ease.
Discover our free tools and start your process today!
