Top 5 Things To Know When Buying a Business in BC

Buying a business is an exciting time and you want to ensure you take the right steps to make the process as smooth as possible. Before purchasing a company, consider the following:

  1. Know what you are buying: will it be the shares of the company or the assets. It is important to understand what structure really works for you as each structure has its advantages and disadvantages.
  2. Get a valuation: obtain an independent valuation of the business, irrespective of whether you are purchasing the shares or assets of the company. This will help you ascertain the underlying value of the business and assist with negotiating the purchase price.
  3. Hire a team of professionals: You will want a team of professionals to assist you through the process, this can include accountants, lawyers, bankers, a valuator, etc. They will help you through the various complex aspects of the transaction.
  4. Obtaining financing: you should determine if you want to purchase a business outright or obtain financing to assist with the purchase. A debt vs. equity analysis will need to occur and there are a lot of tax and legal considerations to consider.
  5. Do your due diligence: you need to learn everything there is to know about the prospective business, so you are informed as to the business’ risk factors and its strengths. The following are some of the searches to conduct:
      • Analyzing financial statements.
      • Learning about business debt, licenses, liabilities.
      • Reviewing the list of customers and suppliers (good will).
      • Reviewing the employee list and how much each employee is paid, their position in the company and how long they have been working.
      • Reviewing all contracts (lease agreements, service agreements, employment contracts, etc.).
      • Performing relevant searches (Land Title searches, Personal Property Security searches, Canada Revenue Agency searches and more).

Buying a business is a big commitment – it will involve a lot of time, money, and energy. Contact Jiwa Law Corporation to help guide you through the entire process.

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Mandy Badwal

Mandy is an associate lawyer with Jiwa Law Corporation and her practice consists of matters relating to Wills and Estate Planning, Corporate and Commercial Transactions, and Real Estate Transactions.

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