Exit & succession planning

Get the business ready before a buyer is at the table.

Most of what determines your sale price is decided years earlier, in the books, the structure and the tax planning. We do that work, and we do it in the order that matters.

Book a free consultationThe Exit Readiness Review

The problem

The gap between planning to exit and being ready to.

76%

of Canadian business owners plan to exit within the next decade

9%

have a formal succession plan in place

$2T+

in business assets expected to change hands over that period

SOURCE: CANADIAN FEDERATION OF INDEPENDENT BUSINESS, 2023

A buyer does not pay for the business you know you have. They pay for the business your records can prove you have. The distance between those two things is where sale prices are lost, and it is almost always closable, given enough time.

The engagement

The Exit Readiness Review.

A fixed-fee diagnostic, delivered in writing, at a price agreed before we start. It answers four questions.

01
What it is worth
A grounded view of what a buyer would likely pay today, based on normalised earnings rather than the number on your T2. We adjust for owner compensation, one-off items and anything a buyer would add back or strip out, and we name the specific things holding the multiple down.
02
Whether the books survive diligence
Buyers and their accountants test the numbers. Revenue recognition, cut-off, accrued liabilities, related-party transactions, personal expenses run through the company, working capital that has never been measured. We find what would surface, while there is still time to fix it quietly.
03
Whether the shares qualify
The lifetime capital gains exemption applies to qualified small business corporation shares, and qualification turns on what the company's assets are used for, both at the time of sale and throughout the 24 months before it. We assess where you stand today and what would have to change.
04
Whether the number is enough
The proceeds after tax, against what you actually need to fund what comes next. This is the question most owners have never had answered, and it is the one that decides whether you sell now or spend two more years building value first.

What we look at

The work behind the review.

Not every item applies to every business. The review tells you which apply to yours, in what order, and what each one is worth.

Normalised earnings
Rebuilding a defensible EBITDA a buyer will accept, with the add-backs documented rather than asserted.
Balance sheet purification
Surplus cash, investments and non-operating real estate can put the shares offside the asset tests. Moving them takes planning and time.
Owner dependence
If the business cannot run without you in it, a buyer prices that risk. Some of it is fixable, and it is worth knowing which parts.
Customer concentration
Revenue leaning heavily on a few accounts is one of the most common reasons a multiple comes in lower than expected.
Corporate structure
Whether a holding company, a family trust or an estate freeze fits what you are trying to do, and what each would cost you in flexibility.
Working capital
Deals are priced on a normal level of working capital delivered at closing. Most owners have never calculated theirs, and it moves the final cheque.

How it runs

Four steps, on your timeline.

Nothing here commits you to selling. Plenty of owners run the review, learn the business is worth less than they assumed, and spend two years fixing that before going to market. That is the review doing its job.

Step one
A free 15–20 minute call about your timeline and what you want out of the business
Step two
The Exit Readiness Review, scoped and priced in writing before any work starts
Step three
The clean-up and restructuring, sequenced so the time-sensitive items start first
Ongoing
Corporate and personal tax, books and payroll handled while the plan runs

Common questions

Exit planning, answered.

When should I start?
Two to three years before you want to sell, at a minimum. Several of the moves that matter, including purifying the balance sheet so the shares qualify for the lifetime capital gains exemption, depend on tests measured over the 24 months before a sale. Start late and those doors are simply closed.
What is the lifetime capital gains exemption, in plain terms?
It is a once-in-a-lifetime amount of capital gain you can realise tax-free on the sale of qualified small business corporation shares. The amount is set by legislation and indexed. Qualifying is not automatic: there are tests on what the corporation's assets are used for, both at the moment of sale and throughout the preceding 24 months.
What usually disqualifies a business?
Most often, too much non-active value sitting in the company: surplus cash, an investment portfolio, or real estate not used in the business. Those assets can push you offside the asset tests. They can often be dealt with, but not overnight.
Do you sell the business for me?
No. We are not a business broker and we do not act as your M&A intermediary. We get the financial and tax side ready, and we work alongside the broker or lawyer running the transaction.
What if I am handing the business to family rather than selling?
The planning is different but no less involved. Intergenerational transfers have their own rules, and the structure that works for a third-party sale is not always the structure that works for a transfer to your children. We would talk through which you are actually heading toward.

Everything on this page is general information about how the rules work, not advice for your specific situation. Tax outcomes depend on your facts, and the legislation changes. Book a call and we will look at yours.

Free download

The exit readiness checklist.

Nineteen questions across the four areas a buyer will test: the numbers, the structure and tax, what the business is worth without you, and what you actually need to walk away with. If you cannot answer one of them, that is the useful part.

Download the checklist
Also available
The BC year-end tax checklist

The planning moves to make before your fiscal year-end, the documents your accountant needs, and the deadlines that catch people.

Download

Next step

Book a call with David.

Fifteen or twenty minutes, no charge. You describe the situation, David tells you whether he can help and what it would cost.

Book a free consultation (778) 980-7276 · info@dsjmaccounting.ca