If you are considering selling your business in BC, or bringing on third party investors, advance planning can add value to your business in a number of ways:
Before you sell your business in Canada, a purchaser will need/want to review your company’s employment agreements. Your company will likely be worth more if the agreements are well drafted. Some of the key clauses should include notice provisions, confidentiality of trade secrets, noncompetition and nonsolicitation.
Without an ownership (or shareholders) agreement, a majority shareholder may not be able to force a sale of the company. It is generally in a majority shareholder’s interest to have a shareholders agreement with drag along rights, which would enable the majority shareholder to force the other shareholders to sell their shares at the same time and on the same terms.
You should consider whether the remainder of the term of your lease and its renewal period is long enough for a purchaser to operate in the premises and obtain a return on its investment. If not, you may want to negotiate an extension of the term before selling a business in BC.
A company’s name is generally a valuable asset and can be protected by a trademark filing as well as at the corporate registrar through a DBA filing. It’s best to make these arrangements before selling a business in BC. Without name protection, the goodwill of the business may be diminished. Your company may also hold valuable copyrights, in which case you will want to ensure that your employees have waived any rights they may have.
Your corporate minute book should be reviewed for compliance before selling your business in Canada. It should clearly show the history of the company, including changes in shareholdings from incorporation to current ownership. A purchaser will not be impressed with a shoebox full of corporate records that fails to meet the requirements of the BC Business Corporations Act.
Our lawyers can assist you if you’re not sure of how to sell your business in Canada. You will want to be careful not to disclose too much information too early, especially to a competitor. Our lawyers can assist you in determining how to phase the disclosure of information. We can also negotiate and draft letters of intent and confidentiality and non-disclosure agreements on your behalf.
At McQuarrie, we regularly review and draft documents and agreements such as these to maximize the value of a company to a prospective purchaser.
If you have a family business question or you need help with a family business planning or succession matter please contact Tako van Popta to schedule an appointment or call us at 604-581-7001 to make your appointment by telephone.
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