Launch Capital
March 18, 2026
The short answer: Selling a business is a project, not an event. Most owners get one chance at it, and the ones who treat it as a process with a start date, a team and a timeline tend to leave less value on the table. This guide walks through the seven stages of a typical sale of a privately held Canadian company.
One Canadian advisory firm puts a typical lower-middle-market sale at six to twelve months from engaging an advisor to closing. Preparation takes two to four months, marketing and negotiation two to three, and due diligence and legal documents another two to four. Smaller or messier businesses can take longer. Plan on a year and you will rarely be surprised.
Start 12 to 24 months before you want to sell. The goal is to find the problems a buyer will find, and fix them first. Look at:
Buyers will price your company on adjusted earnings, so you need to know that number before they do. Recast your financials to remove owner perks, one-time costs and personal expenses paid through the company. Then compare your result with recent sales of similar businesses. Our guide on how much your business is worth covers the methods in detail.
You will want an M&A advisor or business broker, a transaction lawyer and a tax accountant. Bring the accountant in early. How the deal is structured, such as selling shares versus assets, can change what you keep after tax by a large amount. See tax on selling a business in Canada.
Your advisor will draft two documents:
Confidentiality matters. Employees, customers and competitors who hear a sale is coming can change how they behave toward you.
Your advisor will approach a targeted list of buyers under NDA. They range from strategic acquirers in your industry to private equity firms, family offices and your own management team. We cover this in how to find a buyer for your business. Aim for several serious conversations, not one. Competition between buyers is the best lever you have on price and terms.
The letter of intent (LOI) sets out price, structure, timing and key conditions. It is usually non-binding on price but often binding on exclusivity. A typical exclusivity period is 60 to 90 days, during which you cannot negotiate with anyone else. Read the LOI closely. Headline price is only one term. Working capital adjustments, earn-outs, escrows and seller notes all change what you receive and when.
The buyer now verifies everything you have told them. Expect requests for several years of financial statements, customer and product breakdowns, material contracts, employee data and IP documentation. Our due diligence checklist lists what to have ready. Once diligence is complete, your lawyers convert the LOI into a definitive purchase agreement and the deal closes.
Advisors commonly point to the same causes: liabilities that surface after the LOI, financial numbers that do not reconcile, heavy customer concentration, unresolved legal issues, a business that cannot run without its founder, buyer financing that falls through, and unrealistic price expectations. Most of these are visible a year in advance.
If you remember one thing, make it this: begin earlier than you think you need to. Owners who start preparing a year or two ahead have time to fix weaknesses, and a buyer sees a stronger company.
Launch Capital is a Toronto venture capital firm and family office focused on technology and services businesses. If you run a Canadian technology or services business and are weighing a sale, a minority investment or growth capital, contact us.
This article is general information, not legal, tax or financial advice. Speak to qualified advisors about your situation.
