HOW TO EXIT YOUR BUSINESS: THE FINANCIAL IMPLICATIONS

Selling your business, transferring it on to your family members or others, or closing for good (either by dissolution or bankruptcy), triggers a number of financial events that you’ll need to resolve.

An accountant and a lawyer can assist you with most aspects of exiting your business, and should be consulted before you make any decisions.

Selling Your Business

When selling, enlist the help of an accountant, broker, or business valuator to ensure your business is properly priced. These professionals can help you get the best price possible for your business, without leaving any money on the table.

You can also use market research to understand and prove the value your company might bring when you put it up for sale. Refer to our Market Research-Exiting section for more information.

If you are incorporated, you can sell all or part of your business through a share transfer, or by going public. You can raise capital through issuing an Initial Public Offering (IPO), which is selling shares to the public and your corporation changes its status from a private to a public company. If you’re interested in this option, it’s highly recommended that you seek legal counsel. If you don’t have a lawyer, you can contact the B.C. Lawyer Referral service.

Succession Planning

If you decide to transfer your business to family members, friends, or other parties, the financial implications will depend on your business structure and the method you choose to transfer your ownership.

The common ways to transfer ownership of a company to family members include:

• Through joint ownership, either using a share transfer (if the business is incorporated) or using a partnership (if the business is an unlimited company)
• Through a sale, wherein your heirs would purchase the business outright, or over a period of time
• Through your will or living trust
• Through gifting, wherein you would give parts of your business to your heirs gradually over several years

Due to the complexities of succession, we recommend that you draft a formal succession plan for a smooth transition, and that you retain the services of a lawyer and an accountant to help you sort through the legal and tax implications. Refer to our Operations Management-Exiting section for guidance.