Welcome to your
Ownership Transition Tool

There’s a lot to consider when you’re selling or transferring the ownership of your business. Use this tool to discover the factors, stages and steps required to help create a successful exit strategy that’s right for you and your business.
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There’s a lot to consider when you’re selling or transferring the ownership of your business. Use this tool to discover the factors, stages and steps required to help create a successful exit strategy that’s right for you and your business.
Meet Jeff, a dentist
Meet Jeff
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Case Study: Planning your transition play jeff's video
Meet Evelyn, a business woman
Meet Evelyn
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Case Study: Arriving at a sale price play evelyn's video
Meet Bill, a farmer
Meet Bill
play/stop "Shifting ownership to a family member" case study video
Case Study: Shifting ownership to a family member play bill's video

Scotiabank Ownership Transition Tool

image of a business woman, farmer, and dentist
Woman in red shirt and business suit
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Questionnaire
1
Having a long-term plan can help ensure a successful transition.
2
You have three main options: Sell now for a one-time payment, sell part of the business each year and stay involved for an interim period, or arrange to sell the business at a future date.
3
You have four options. You can transfer or sell the business to: a family member, one or more employees from your company, associates or business partners you know or an unknown third party.
4 How do I structure a deal?
When it comes time to structure a deal, your advisors play a crucial role.
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to "Planning"
Tab 1 of 4 Questionnaire
Tab 2 of 4 Active Tab Planning

Create a communication plan

The words “retirement” and “new owner” can cause concern among clients and staff. A solid communication plan can help ease uncertainly and reduce the risk of costly business disruptions.
Staff
If you’re often away during the day without explanation, rumours can start. You may want to enter something plausible in your calendar to explain your absence until a deal is close. At that point, you can assemble the team and explain your plans. If it’s possible, assure them that their future with the company is safe.
Clients/Patients/Suppliers
When both parties have committed to the deal, tell key clients or patients and suppliers about the change. Send a letter or email first, then follow up with a phone call. You may even want to meet with larger clients or suppliers in person.
When both parties have committed to the deal, tell key clients or patients and suppliers about the change. Send a letter or email first, then follow up with a phone call. You may even want to meet with larger clients or suppliers in person.
Assure them that the business will be very much the same. Let them know if you’re going to remain involved for the foreseeable future. While some clients or suppliers might be expecting this news, it’s still an issue that requires diplomacy. Coaching can be an excellent investment.
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to step 5 of 6
Next
to "closing the deal and life after"
Tab 1 of 4 Questionnaire
Tab 2 of 4 Planning
Tab 3 of 4 Active Tab Closing the Deal & Life After

Steps towards a deal

The ownership transition must be set out in various legal agreements. During this phase, it is particularly important to work with both your lawyer and accountant.
Overview of steps:
  • Meet to discuss the deal outline
  • Agree on the basic terms: price, buyout period, etc.
  • Sign a confidentiality agreement
  • Disclose the financial performance of the practice or business for sale
  • Due diligence by the buyer
  • Offer a Letter of Intent
  • Conclusion of negotiation and final agreement of terms
  • Review and sign the Buy/Sell agreement
  • Resignation of Directors and any filings under Bulk Sales act
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to "Planning"
Next
to step 2 of 4
Tab 1 of 4 Questionnaire
Tab 2 of 4 Planning
Tab 4 of 4 Active Tab Now you're ready!. What's next?

Now You're Ready!

Congratulations. You’ve reviewed key steps towards a successful ownership transition. Now you’re ready to put your plan into action and Scotiabank Small Business advisors are here to help.
Call us Today. We’ll take the time to understand your professional and personal needs and ensure your succession plan fully meets those needs. And you can count on receiving the right financial solutions for you, every step of the way.
Make your exit strategy a success. Contact a Scotiabank Small Business Advisor near you.

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This document was created using assumptions that are believed to be reasonable. Results may differ, perhaps to a material degree.

This plan is not intended to be a blue print of your financial future, but rather a tool to be used to guide and compare relative financial decisions.

This Transition Assessment is prepared for the general information and education of clients relative to their own particular situation based on the data provided by the client. To the extent that the data provided is incomplete or inaccurate, so too are the resulting recommendations. Please review all data thoroughly to ensure it is correct.

All legal decisions must be made only with the counsel of a qualified attorney. We make no attempt to give legal advice, nor do we draft or in any way modify legal documents. Likewise, any suggestions pertaining to income tax or accounting strategies should be implemented only with the advice of a qualified accountant.

Step 1 of 5

Your ownership transfer options

Sell the business for a one-time payment
Depending on the buyer's needs and your preferences, you may offer to stay involved during the management transition.
Sell over time
You can arrange to transfer ownership of part of the business each year and work with the buyer until the entire price has been paid. You may choose to be actively involved over the transition, reducing your hours each year as the buyer gains a higher percentage of ownership.
Sell the business at a future date
Use the interim period to focus on building your business, creating the potential to sell for a higher price.
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to step 2 of 5
Step 1 of 7

Choosing your next business owner

Let's look at the four basic options:
  1. Pass the business to the next generation of your family
  2. Develop talent from within and choose one employee or more, who will take over the business when you retire
  3. Bring in associates or partners to buy the business from you over time
  4. Sell to an external third party buyer
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to step 2 of 7
Step 4 of 4

What can you do to help the buyer obtain financing?

For third-party financing, the buyer will require good financial information about business performance. He or she will undertake their own due diligence. This information will give the lender confidence that the business has a solid track record of profitability.
By combining an assessment of the historical performance of the company, with an assessment of the financial capacity of the new owner, a lender will have an accurate picture of how much new debt can be supported.
"Vendor take-back" financing
It may make sense for you to be a source of financing. It depends on:
  • Your purchaser's needs
  • Your willingness to defer the proceeds of sale
  • The tax and legal implications of continuing financial support of the business
Remember, while vendor-take back financing may be appealing, if the buyer defaults on payments, you’ll have to jump back into the business. That’s something you may not want to do.
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to step 3 of 4