Deal preparation and structuring support

What it is

Three pieces of work, usually run in parallel:

1. The data room. A secure, organized set of folders holding the documents a buyer's team will review: financial, legal, people, customers, operations and tax. Our data room checklist lists what Canadian buyers typically request.
2. The business story. A clear written profile of the company covering what it does, how it earns money, why customers stay, and where it could grow, with every claim backed by data in the data room. Brokers call this a confidential information memorandum. If you have a broker, we help you feed them accurate material.
3. Offer literacy. Plain-language explanations of the terms you will meet, and a list of questions to take to your lawyer.

Terms worth understanding before you see an offer

• Headline price versus cash at closing. The headline number may include amounts paid later, or only if targets are met.
• Earn-out. Part of the price depends on the business hitting future targets. Ask who controls the business during the earn-out period and how the targets are measured.
• Vendor take-back (seller note). You lend part of the price to the buyer, repaid over time. You become a creditor of your former business.
• Holdback or escrow. Part of the price is held back for a period to cover claims under the agreement.
• Working-capital target. A level of receivables, inventory and payables the business must deliver at closing; the price is adjusted up or down against it.
• Representations and warranties. Statements of fact you make about the business, with consequences if they turn out to be wrong.
• Non-competition and transition terms. How long you stay, in what role, and what you can't do afterwards.
• Exclusivity. A period in which you agree not to talk to other buyers.

Each of these is legal territory. Our job is to make sure you recognize them and know what to ask.

Canadian points to raise with your advisers

• GST/HST on an asset sale. Where a buyer acquires all or substantially all of the property needed to carry on the business, buyer and seller may be able to jointly elect that no GST/HST applies, using Form GST44. Whether it applies is your accountant's call.
• Price allocation. In an asset deal, the CRA explains that the price is allocated across assets, inventory and goodwill. Buyers and sellers often want different allocations.
• Customer personal information. Under section 7.2 of PIPEDA, parties to a prospective business transaction can share personal information without consent only under conditions, including an agreement limiting its use and requiring its return or destruction if the deal does not proceed. Ask your lawyer before any customer list leaves the building.
• Provincial clearances. Several provinces have sales tax and workers' compensation clearance steps on a sale. See your province on the areas page.

What's included

• Data room structure, document gathering and gap-filling, with a request tracker.
• The written business profile, reviewed for accuracy against the data room.
• A term-by-term walkthrough of any letter of intent or offer, with questions for your lawyer.
• A response process for diligence questions: who answers, how fast, and who checks.
• Preparation for management meetings with buyers.

Timeline

A data room can be built in four to eight weeks if the readiness work is done, and much longer if it isn't. Diligence itself commonly runs for weeks to a few months depending on the buyer and the size of the deal.

How results are measured

• Share of standard requests already answered in the data room before the buyer asks.
• Average days to answer a new buyer question.
• Number of issues raised in diligence that were unknown to you beforehand, aiming for none.

Mistakes to avoid

• Signing a letter of intent without legal review. Exclusivity and other clauses may bind you.
• Overstating the story. Every claim will be tested. One unsupported claim undermines the rest.
• Letting the business slip during the sale. Results during diligence count. Keep running the company.
• Sharing sensitive data too early. Customer names, pricing and staff details should follow a signed confidentiality agreement and, often, a staged release.

Deal preparation builds on valuation readiness and the exit readiness assessment. Fees are on the pricing page. If a buyer is already at the door, call, text or email today.