Your Lawyer and Accountant When Selling a Business

Selling privately means you don't pay a broker, but it doesn't mean doing everything alone. A lawyer and an accountant are the two advisers most owners rely on. Knowing what each one does, and bringing them in at the right time, can save you money and avoid surprises at closing.

What your accountant does

Your accountant helps with the numbers before and during the sale:

• Clean financial statements. Two to three years of tidy, consistent statements make buyers more comfortable. See documents needed to sell a business.
• Normalized earnings. Separating one-off and personal costs from the real cost of running the business. See add-backs and normalized earnings.
• Tax planning. Estimating what you'll keep after tax, and how an asset sale or a share sale changes that.
• Sales tax on the sale. Whether GST, HST or PST applies to what you're selling. See GST and PST when selling a business.
• Closing figures. Checking inventory counts and closing day adjustments.

What your lawyer does

Your lawyer protects you in the documents:

• Confidentiality. Preparing or reviewing an NDA before you share sensitive details.
• The letter of intent. Making sure the key terms are clear and which parts are binding. See what is a letter of intent.
• The purchase agreement. Reviewing or drafting the main contract, including warranties, conditions and remedies. See the purchase agreement.
• Transfers. Assigning the lease, contracts and licences. See transferring contracts and licences.
• Payment security. If you lend part of the price, securing it with a promissory note, guarantee or security agreement. See vendor take-back financing.
• Closing. Preparing closing documents and handling the funds.

When to bring each one in

1. Months before listing: meet your accountant about your statements, earnings and tax.
2. Before sharing details: have an NDA ready, ideally reviewed by your lawyer.
3. Before signing a letter of intent: ask your lawyer to review it, and your accountant to check the price and structure.
4. During due diligence: both may answer buyer questions or review what you send. See due diligence when selling.
5. Through closing: your lawyer runs the documents, your accountant checks the final figures.

How to choose them

• Look for small business sale experience. Ask how many sales of businesses your size they've handled recently.
• Ask about fees up front. Hourly, a fixed fee for set steps, or a mix. Ask for an estimate in writing.
• Check they're local enough. Rules on leases, licences and sales tax vary by province.
• Keep your current accountant in the loop even if you add a specialist, since they know your history.
• Ask about conflicts. Your lawyer should act only for you, not the buyer.

Making the most of their time

• Keep your documents organized in one folder before the first meeting.
• Write down the deal points you and the buyer have agreed, in plain words.
• Collect your questions and send them together.
• Ask what you can prepare yourself, such as equipment lists or customer contract summaries.
• Read drafts carefully and ask about anything you don't understand. It's your sale.

A note on advice

This guide is general information, not legal, tax or financial advice. Every business and sale is different. Please talk to a qualified accountant and lawyer in your province about your own situation.