When good news appears on the jobs front, every business for sale in Canada begins to look that bit more sales-worthy. In March there were 190,000 more jobs than at the same time last year. Most of these jobs were taken by young workers in the age bracket of fifteen to twenty-five. As a cautious optimism grows about the economy, it’s time to look again at the process of evaluating a prospect business.
Here are some of the pitfalls and things to remember:
- Operating Assets: Be aware that buying a business usually means buying the operating assets. These are the property, the infrastructure, the equipment etc. There are also intangible assets which include things like patents, trademarks and intellectual property. With exceptions such as land, most types of operating assets depreciate, deplete or (in the case of intangible assets) amortize over time. Operating assets should be distinguished from company shares.
- Valuing a company: A business for sale in Canada can be valued according to its assets and its earnings. An asset valuation will measure the value of a company’s assets against the value of its liabilities. If the company is in liquidation, the valuation estimates the total amount achievable by the selling of all of the company’s assets. On the other hand, a profits valuation will calculate the value of the company based on its ability to perform and make money in the future. Business valuation is usually better left to a third-party agent.
- Advantages: When approaching a business for sale in Canada, no matter how good the balance sheet is or the potential profit margin, take time to consider the company’s value-proposition. What does it do? How unique is its product or service? What advantages does it have over other players in the market? Profit margins can always fluctuate. Be sure that you believe in what the company is doing.
- Cultural Considerations: A business for sale in Canada may attract interest from all around the world. If you are coming from abroad, take the time to acclimatize yourself to the culture and region you are relocating to. Inevitably, some people will perceive foreign ownership as a threat. Respectful engagement early on can have positive outcomes for staff and customer relations down the road.