Case Study: Successful Sale of Canmore Lube & Muffler
When it comes to selling a business, finding the right buyer and structuring a deal that benefits both parties is key. In this case, Alberta Business Sales (ABS) successfully facilitated the sale of well-established automotive service shop in Canmore, Alberta. Through strategic negotiation, creative financing solutions, and a well-matched buyer, ABS ensured a smooth transition, allowing the seller to move forward confidently while the new owner stepped into a thriving operation. This case study highlights the challenges, solutions, and key takeaways from this successful transaction.
Client Overview
The shop specializes in same day oil changes, tires and alignments, and muffler and engine work. With over 6 full-time technicians this automotive shop is a well-oiled machine and one that did not rely on the owner being there every single day. Located just outside of downtown Canmore meant that customers could walk to main street and there was no nearby competition.
The Buyer
Due to the success of the business and its location we initially attracted many corporate groups looking to expand. However, the successful buyer was an individual owner who has previously run their own lube shop for over ten years. The buyer had just sold their lube shop in the past year and was looking to relocate to the Calgary area to be closer to their family.
Challenge
In many towns and rural areas in Alberta it can be a challenge to sell your business. While there are many attractive and profitable businesses in these areas more often than not buyers will gravitate towards the large city centres. Canmore is a bit unique as it is one of the largest tourist destinations in all of Alberta attracting over 5 million visitors a year[1]. While this tourism is great for local businesses this flood of people into Canmore over the years had resulted in a booming real estate market. In turn this means for business owners some of the most expensive lease rates in the province as well as a high cost of living for staff.
Solution
In order to complete the transaction, the financing terms were crucial. Thanks to our relationships with charter banks we were able to structure a deal that benefited both the seller and the buyer. About 15% of the deal was deferred via a Vendor-Take-Back-Loan and we were able to secure financing quickly which allowed us ample time to prepare for the transition of ownership.
Outcome
We were able to negotiate a deal in which both parties benefited:
- The seller received the cash at close they required to maximize their life-time-capital-gains-exemption;
- The seller received additional proceeds via a Vendor-Take-Back-Loan which was tax beneficial for them;
- The buyer was able to maintain a healthy amount of their cash on hand to assist with working capital in the business while the loan was structed in such a way that the debt repayment did not restrict the business’ cash flow.
Key Takeaways
- Industry Fit: The buyers background in the industry greatly helped with securing financing and meant the legacy of the business was in the right hands.
- Flexibility: The seller’s willingness to consider creative deal structures, like seller financing, was pivotal in closing the deal.
- Collaboration: ABS’s strategic guidance ensured that both parties felt supported and confident throughout the process.
Conclusion
This transaction highlights the ability to find win-win scenarios when working through a business sale. The seller was able to transition to the next stage of their life knowing they have the funds required to do so while their business legacy is able to continue. Meanwhile the buyer is able to relocate closer to family while continuing to work in the industry that they specialize in.
[1] https://www.theglobeandmail.com/canada/article-alberta-canmore-tourism-boom/#:~:text=In%202021%2C%20visitation%20reached%20just%20over%20five%20million.
Craig Panek Broker, Alberta Business Sales and Commercial Ventures