Five Keys to a Successful Business Transfer

Beyond the Numbers: The Human Side of Business Transfers 

According to Geneviève Vigneault, Partner and Mergers & Acquisitions Lawyer at BCF, business transfers bring forward a range of human challenges for both the departing owner and the new buyer. 

“A business transfer is rarely just a transactional matter. It’s a human encounter, often filled with emotion,” she explains. 

For the founder or long-time owner, letting go can be difficult. It often means turning the page on a lifetime of work. It requires stepping back, looking at one’s creation objectively, and accepting that it may evolve in a different way. 

On the other side, successors face their own set of challenges: maintaining growth, earning the trust of employees and clients, and meeting the expectations of financial partners, often while only partially understanding the company’s inner workings. 

What Experience Teaches Us: Five Keys to a Successful Business Transfer 

1. Defining Your Objectives and Putting Them in Writing 

Having a plan is essential... but only if you actually use it. Ms. Vigneault recommends writing down your motivations, objectives, timeline, terms, and the deeper reasons behind the transaction. 

“A written plan serves as a guide throughout the process. It helps prevent derailments and keeps negotiations focused.” 

This plan becomes a North Star: it keeps everyone aligned, clarifies priorities, and guides decision-making. It also serves as a guide for formalizing agreements, thinking about how to retain key personnel, facilitating the optimization of the legal structure, or planning for leadership transition. For buyers, it’s an opportunity to consider the financing needed, explore a gradual acquisition, or negotiate a price based on future performance. 

2. Preparing Clear and Understandable Documents 

A successful business transfer always starts with a clear understanding of the business terms, typically captured in a letter of intent or an expression of interest. This preliminary document, usually drafted before due diligence, ensures that the main points are shared and agreed upon. 

Key elements include: 

• The composition of the purchase price and any adjustments 
• Financing arrangements 
• Guarantees on earn-out or deferred payments 
• The seller’s role after the transfer 
• Allocation of risks between the parties 

If the seller remains involved, it is essential to clearly define their role to avoid misunderstandings. 

This preliminary agreement also serves as the foundation for the sale contract, which details representations and warranties.  

These guarantees act as an official snapshot of the business at the time of the sale. They cover finances, operations, compliance with existing laws, assets, employees, real estate, taxation, and more. If any information proves inaccurate, the buyer may seek financial compensation, highlighting the importance of documenting everything clearly and maintaining balance between the parties. 

3. Analyzing and Understanding the Business in Depth 

Transparency is a key asset in any business transfer process. It relies on a thorough and multidimensional analysis of the company. 

“Valuing an SME is an art. It can’t be done solely from financial statements, because an SME is a living, fast-moving organism,” notes Ms. Vigneault. 

A comprehensive evaluation helps reduce unrealistic expectations from the seller regarding price, uncover hidden assets, and assess growth potential, dependency on key personnel, customer diversity, and working capital needs. 

Due diligence then confirms the valuation, provides a deeper understanding of the company culture, and collects the necessary information for post-transaction integration. At a minimum, it should cover operational, fiscal, accounting, human resources, environmental, and legal aspects. 

4. Establishing Transparent and Respectful Communication 

Transparency isn’t just about numbers; it must also be at the heart of communication between the parties. Open dialogue often preserves relationships and, in some cases, can even save the deal. 

Building a climate of trust is essential, especially when discussions become complex. The goal is not to contrast the seller’s past with the buyer’s future, but to focus on the shared project: ensuring the company’s continuity. 

Communication is also crucial to reassure employees, clients, and suppliers. Messages should be clear, consistent, and focused on the transition rather than the departure. 

In a management buyout (MBO), where the leadership team acquires the company, this dynamic is even more delicate. If the transaction fails, there is a real risk of losing key team members. This is why it’s so important to maintain open and aligned communication throughout the process. 

5. Setting a Realistic Timeline. And Sticking to It. 

In some cases, such as an MBO, the transfer process may involve three simultaneous transactions: financing, the sale itself, and post-transaction agreements. This adds significant pressure to the schedule. 

A clear timeline helps anticipate obstacles, coordinate all parties, and minimize delays. Financing, in particular, can slow down the process, so the seller may benefit from tracking progress or even contributing to its advancement. 

Regular check-ins between the parties allow issues to be resolved quickly and help ensure that deadlines are met. 

A Meaningful Transaction 

Although complex, business transfers remain one of the most powerful drivers of our economy. Through their boldness and commitment, entrepreneurs who engage in a transfer process inject essential energy into Québec’s economic landscape and help ensure its long-term sustainability. 

Need support for a business transfer or acquisition? Meet our Mergers, Acquisitions and Business Transfers team. 

You can also visit Repreneuriat Québec to explore more relevant information on business transfers or take advantage of a full range of services covering all stages of a transfer, from preparation to matching potential buyers and sellers.