Selling Your Private Business


In a recent article in the Globe and Mail, “Why You Shouldn’t Hire a Real Estate Agent to Sell Your Business”, Chris Griffiths discusses why selling an operating company can be complex and beyond the expertise of a real estate agent.

Specifically, he correctly points out that selling a business is inherently more complicated than a straightforward transfer of real estate.  Buyers will typically want detailed financial and business information related to the subject business.  Valuating an operating businesses is complicated, often requiring an in-depth knowledge of the business and industry.  Negotiating terms of purchase and sale are complex and get adjusted for the performance of the business.

He also points out that most real estate agents are not equipped to facilitate the purchase or sale of an operating business.  This is not their area of expertise.  Instead, you will want to engage a knowledgeable and experienced business broker or similar intermediary.

What the article does not mention is that as much as it is important to hire the right broker or intermediary, it is equally important to engage legal counsel who has the requisite expertise to help guide you through the sales process, identify legal risks and offer solutions, negotiate the terms of purchase and sale, and properly document and close the transaction.  Any buyer or vendor of a business will want to hire a business lawyer who specializes in these types of transactions.

I recall one file where a party to a transaction involving the purchase and sale of shares in a private company hired a real estate agent who proposed using the standard form residential real estate purchase contract to govern the transaction.  Many provisions in such contracts which may be relevant to the sale of a residential home, such as whether the kitchen appliances and window blinds are included in the sale, are wholly inapplicable to the sale of shares of a private company. Needless to say, this was nothing less than trying to fit a square peg through a round hole.  Neither party would have been well served.

Topics:  Real Estate Agents, Selling a Business

Published In: General Business Updates, Commercial Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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