How to Sell a Business in Canada: Step-by-Step Guide for 2025
Selling your business is one of the biggest financial decisions of your life.
For most founders, it’s the single largest liquidity event they’ll ever experience—and how you prepare determines whether you leave money on the table or walk away with a life-changing result.
If you’re a Canadian business owner generating $2M–$20M in revenue, this guide outlines exactly how to sell a business in Canada, step by step—from valuation to closing the deal.
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Red-flag risk items buyers spot quickly
Valuation drivers by business model
A 6-phase roadmap from prep to post-close
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Step 1: Understand What Your Business Is Worth
Before you can sell, you need to know your baseline value.
Buyers price businesses using a simple framework: EBITDA × Multiple.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization—essentially your company’s core profitability.
The multiple depends on industry, size, and risk profile.
For example:
If your business earns $800,000 in EBITDA and sells at a 4x multiple, your estimated valuation is $3.2 million.
Curious about your company valuation? Start with a Free Business Valuation from the Breakwater team.
Typical valuation multiples for Canadian mid-market businesses range from 3x–6x EBITDA.
Step 2: Prepare Financials and Legal Documents
Preparation is where deals are won or lost.
Clean, organized documentation gives buyers confidence and speeds up due diligence.
Here’s a quick checklist:
3 years of accountant-prepared financial statements (review-level or higher)
Corporate tax returns and T2 filings
Updated customer, supplier, and employee contracts
Lease agreements with clear transfer rights
Ownership and shareholder documents
List of equipment and assets
If you’re still expensing personal items through the business, now is the time to clean that up.
Buyers pay higher multiples for transparent, normalized earnings.
Step 3: Work With an Experienced M&A Advisor
You wouldn’t sell your home without a realtor—why sell your business without representation?
A skilled M&A advisor or business broker can increase your sale value by up to 25%.
Here’s how:
Position your company to highlight strengths and minimize risks
Access pre-qualified buyers (strategic, private equity, search funds)
Create competitive tension with multiple bids
Manage the due diligence process and keep momentum
Negotiate favourable terms—not just price
At Breakwater, our advisory model is founder-first.
Roughly 90% of our compensation is tied to closing success, so our incentives are aligned with yours.
“The right advisor doesn’t just find a buyer—they find the right buyer, and they protect you through the entire process.”
Curious what questions you should ask? Start with our How to Find the Right M&A Advisor blog.
Step 4: Market Your Business Confidentially
Confidentiality matters. You don’t want employees, competitors, or customers finding out prematurely.
A professional sale process ensures only qualified buyers access your information under NDAs (Non-Disclosure Agreements).
Your M&A advisor will:
Prepare a Confidential Information Memorandum (CIM)—a professional marketing package
Identify and contact strategic buyers
Vet interest discreetly
Schedule management calls and site visits
This structured process keeps control in your hands while building competition among buyers.
Step 5: Negotiate Deal Terms and Structure
The purchase price is only half the story.
Terms often determine how much you actually take home.
Common deal structures in Canada include:
All-cash deals (less common, but simplest)
Earn-outs, where part of the price is paid based on future performance
Seller financing, where you carry a small note for the buyer
Rollover equity, keeping partial ownership in the new entity
A good advisor helps you balance risk and reward—maximizing cash at close while protecting upside potential.
Tip: Using an M&A advisor can help manage a competitive process for buyers. The result is more buyer competition, which can increase the value by hundreds of thousands (or more).
Step 6: Manage Due Diligence and Closing
Once you’ve signed a Letter of Intent (LOI), the buyer begins due diligence—a deep dive into every corner of your business.
Expect requests for financial data, contracts, customer details, and operational metrics.
Here’s how to stay ahead:
Have your data room organized before going to market
Be transparent and responsive—stalling raises red flags
Keep running your business as usual; buyers want stability
Lean on your M&A, legal, and accounting teams to handle requests
Due diligence typically lasts 30–90 days, followed by the final purchase agreement and closing.
Step 7: Plan for Taxes and Post-Sale Transition
In Canada, tax planning can make a massive difference to your net proceeds.
The Lifetime Capital Gains Exemption (LCGE) allows qualifying shareholders to exclude up to $1 million of capital gains from tax.
That’s a potential six-figure savings if planned early.
Other steps to consider:
Set up a holding company or family trust (talk to your accountant)
Review how the purchase price is allocated (shares vs. assets)
Clarify your post-sale involvement—some buyers want a transition period of 6–12 months
Early planning ensures a smooth handoff and keeps more money in your pocket.
Common Mistakes Canadian Owners Make When Selling
Avoid these pitfalls to protect your deal value:
Waiting too long to prepare — rushing when burnt out reduces leverage.
Not cleaning financials early — messy books scare away quality buyers.
Focusing only on price — structure, taxes, and timing often matter more.
Telling staff too soon — keep communication controlled until the deal is secure.
Skipping professional advice — even one overlooked clause can cost millions.
Typical Timeline for a Business Sale in Canada
Frequently Asked Questions About Selling a Business in Canada
How long does it take to sell a business in Canada?
Most mid-market transactions take 6–12 months from start to close, depending on industry, financials, and buyer demand.
What is the best time to sell my business?
Ideally, sell when revenue and profits are trending upward and before burnout sets in. Buyers pay more for growth stories.
Do I need a business broker or M&A advisor?
While it may sound bias coming from us - yes. Why? Because working with an advisor can increase your sale price by up to 25% and protect you through negotiations and due diligence.
Will I pay capital gains tax on the sale?
Yes, but many owners qualify for the Lifetime Capital Gains Exemption (LCGE), which can shield up to $1 million in tax-free proceeds.
Should I tell my employees that I’m selling?
Not right away. Keep the process confidential until a deal is signed. Your advisor will help plan communication for a smooth transition.
What if I’m not ready to sell yet?
That’s even better. Early preparation allows you to improve valuation, reduce risk, and sell from a position of strength.
Key takeaways
Most Canadian businesses sell for 3x–6x EBITDA, depending on sector and risk.
Start preparing 12–24 months before you plan to sell.
Clean financials, reduced owner dependence, and buyer competition drive higher valuations.
The LCGE can exempt up to $1 million of capital gains—plan early with your accountant.
Work with experienced M&A advisors to manage confidentiality, valuation, and negotiations.
Recommended Reading
If you found this guide helpful, explore more Breakwater insights on selling and valuation:
How to Find the Right M&A Advisor for Your Business Sale
Learn what traits to look for in an advisor, fee structures, and how the right partnership can add up to 25% more value.
How to Sell a Business with $500K in EBITDA or More
A practical playbook for preparing your company for market and maximizing valuation.
Should I Use a Business Broker to Sell My Business?
Understand the difference between brokers and M&A advisors—and which is right for your size and goals.
Received an Unsolicited Offer for My Business—What Should I Do?
How to respond to inbound buyer interest strategically without leaving money on the table.
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