Client Overview
Alberta Business Sales (ABS) worked with a small digital marketing company that specialized in providing SEO, social media management, and content marketing services. With a well-established client base and a reputation for delivering results, the business was positioned for growth but required new ownership to reach the next level.

The Buyer
The buyer was an entrepreneur in the same industry, running a business that offered complementary services such as web development and pay-per-click (PPC) advertising. They saw the acquisition as an opportunity to expand their offerings and provide a one-stop solution to clients of both businesses.

The Challenge
Although the business had strong financials and a loyal client base, the buyer market in the digital marketing space is often price-sensitive. Securing the seller’s asking price required careful negotiation and a deal structure that would appeal to the buyer. As a service-based business with limited tangible assets, securing bank financing for this purchase presented a significant challenge. Currently, most financial institutions show limited appetite for businesses of this nature or size.

The Solution
ABS identified early in the process that flexibility in deal structure could be a key factor in securing the asking price. Working closely with the seller, ABS proposed incorporating a seller financing arrangement to support the goodwill portion of the business. This demonstrated the seller's confidence in the business's continued success under new ownership and reduced the buyer's upfront financial burden. The transaction was structured with a combination of cash at closing and seller financing, accounting for 100% of the deal. This approach provided the seller with a more secure position, as they were not subordinate to any senior debt that might have otherwise been involved.

The Outcome
The deal closed with the seller receiving their full asking price, thanks to the balanced structure that included seller financing for a portion of the goodwill. Both parties benefited from the arrangement:

• The seller achieved their financial goals while transitioning the business to a capable buyer.
• The buyer acquired a thriving business and leveraged their complementary services to create new revenue streams.
• The transaction was completed in a timely manner that aligned with the needs of both parties, avoiding the extended timeline that would have been required had bank financing been involved.

Key Takeaways

• Industry Fit: Matching the business with a buyer in a complementary sector added immediate value.
• 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 case highlights the importance of flexibility and strategic alignment in successful business sales. Alberta Business Sales is proud to have facilitated this win-win transaction, enabling both buyer and seller to achieve their objectives while ensuring the business’s continued growth.

Heather Miller General Manager, Alberta Business Sales and Commercial Ventures

Jay Barrett Broker, Alberta Business Sales and Commercial Ventures

Working as a business broker has given me the chance to witness firsthand the intricate, emotional, and multifaceted world of business ownership transitions. Every deal is unique, and every client has left an impression on how I approach this profession. Here are some key lessons I’ve learned, based on real-world experiences.

1. The Importance of Flexibility: Navigating the Emotional and Practical Aspects

Selling a business is not just a financial transaction—it’s deeply personal. Business owners often view their companies as extensions of themselves, having invested countless hours, resources, and emotional energy into building them. Therefore, when it comes time to sell, there is often a natural resistance to certain changes or suggestions, particularly regarding price or business valuation. Fear of the unknown can lead to rigid stances on key elements of the deal.

For instance, I’ve learned that many sellers start out with a strong belief in a fixed sale price, largely influenced by their emotional attachment to the business or preconceived ideas about its worth. While confidence in your business is important, so is flexibility. Market conditions, buyer perceptions, and deal structure flexibility can all play a significant role in closing a successful transaction. In one deal, for example, the buyer proposed an earn-out structure—where part of the payment is contingent on the business’s future performance. While this initially seemed risky to the seller, it ultimately provided a solution that aligned with both parties’ goals. Flexibility in deal structures such as this can bridge gaps in price expectations and ease concerns about business continuity post-sale.

Another area where flexibility is crucial is in receiving and accepting feedback. A buyer may perceive the business differently than the seller, identifying areas of improvement or potential risks that hadn’t been previously considered. For the seller, hearing critiques about something they’ve built can be difficult, but it’s essential to separate emotions from business. What may seem like harsh criticism is often an opportunity to better position the business for sale and may reveal aspects that enhance the value in ways previously overlooked. Being open to this type of feedback is often the difference between a prolonged listing and a successful sale.

2. Documentation and Organization: Preparing for Buyer Scrutiny

One of the most common challenges I’ve encountered is the lack of organized, clear financial records and essential business documents. Business owners are often so focused on the daily operations—keeping clients happy, managing staff, and handling the never-ending stream of tasks—that administrative duties like organizing financials or updating legal documents take a backseat. While understandable, this can create significant barriers when it’s time to sell.

Buyers often make decisions based on clear and easily digestible financial data. In many instances, however, sellers are unprepared to present up-to-date financials, corporate minute books, or accurate asset and inventory lists. A buyer’s due diligence process hinges on having access to this type of data to validate the seller’s claims about the business’s profitability and future prospects.

To give an example, I’ve seen potential deals slow to a crawl simply because the business’s financial statements were disorganized, or worse, incomplete. It’s not just about having a profit and loss statement; it’s about ensuring these numbers are consistent and verifiable. Buyers want to see stability over time, and discrepancies or missing information create doubt. An ounce of preparation truly does go a long way in expediting the process and increasing a buyer’s confidence.

Statistically, businesses that present organized financial data can reduce the time spent on due diligence by nearly 50%. In a market where many buyers are looking for quick, clean acquisitions, the readiness of these documents can be the difference between closing a deal in three months or losing buyer interest altogether.

3. Business Owners Want a Partner: More Than Just a Transaction

Selling a business can often feel like stepping into uncharted territory for most owners. The uncertainty around valuation, deal structure, and the future of their business post-sale creates stress and anxiety. Many owners I’ve worked with aren’t just looking for a transaction—they’re looking for someone to be there with them, to help guide and reassure them through the process.

This is one of the reasons why, at Alberta Business Sales, we pride ourselves on truly being in the trenches with our clients. Selling a business is a complex, multi-step process, and business owners appreciate having someone to turn to when obstacles arise. A business broker's role isn’t just to find buyers; it’s to stand by the seller, helping navigate negotiations, identifying potential pitfalls, and providing clarity in what can often feel like a sea of confusion.

I’ve seen many instances where sellers initially feel overwhelmed by the sale process but later find relief in knowing they have a team guiding them step-by-step. Whether it’s explaining market trends, walking through deal structures, or simply providing emotional support during those tough conversations, being in the trenches with our clients is what ultimately builds trust and gets deals done. According to industry data, businesses sold through brokers that offer comprehensive support are 2-3 times more likely to close compared to businesses sold without professional assistance.

In conclusion, selling a business is never just about numbers. It’s a deeply personal process, and every client has taught me the importance of flexibility, preparation, and partnership. If you’re considering selling your business and don’t know where to begin, know that you don’t have to do it alone. Let’s roll up our sleeves and get in the trenches together. After all, you’ve already done the hard part of building your business—now, let’s make sure you get the reward for all that hard work.

Heather Miller General Manager, Alberta Business Sales and Commercial Ventures

When selling a business, owners can often feel defensive about how potential buyers assess and value the company. This is understandable, as many owners have spent years—sometimes their entire careers—building a business that supports them. Receiving an offer that seems lower than expected can be difficult for an owner to accept, as it doesn’t always align with their personal sense of the business’s worth. So, how do buyers and sellers come together to agree on a fair price?

Key Factors in Determining Business Value:

Many factors play a role in determining a company's value, but one of the most critical metrics is EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA focuses on a company’s primary earnings by excluding debt costs, taxes, and non-cash items like depreciation and amortization. Essentially, it measures how much money a company makes from its regular operations, without considering external financial factors.

Not only is EBITDA a useful tool for buyers in determining a business’s profitability, but lenders also rely on it to gauge whether the company can meet future debt obligations.

Why Owners Should Understand EBITDA Adjustments:

It’s essential for business owners to know how to calculate EBITDA and account for any necessary adjustments. Adjustments are typically made for non-recurring, non-operational, or unusual expenses, allowing owners to present a clearer picture of the company’s financial health. These adjustments, known as normalizations, help showcase the business's true operating performance.

For example, normalizations could include:

• Excessive owner wages
• Abnormal repair or maintenance costs
• Legal fees
• Personal expenses paid through the company

Determining a company’s adjusted EBITDA is crucial for showing potential buyers the company’s core profitability. Buyers often base their offers on a multiple of these earnings, so the more accurately an owner can present and justify their adjusted EBITDA, the better their chances of securing a higher offer.

How EBITDA Differs from Cash Flow:

While EBITDA is a useful measure of operational performance, it’s important to understand how it differs from cash flow. It provides a snapshot of how well a company is doing from an operational standpoint, but it doesn’t account for actual cash moving in and out of the business.

Cash flow, on the other hand, reflects the actual cash generated or consumed by the business over a specific period. It includes operational earnings, but also factors in:

• Changes in working capital
• Interest payments on debt
• Capital expenditures
• Taxes

In other words, cash flow provides a more comprehensive picture of the financial health of a company because it considers both operational and non-operational cash movements. While EBITDA may show profitability, strong cash flow is necessary to ensure that a business can meet its financial obligations, reinvest, or return capital to shareholders.

In summary, EBITDA gives an owner and potential buyer insight into a business's profitability, while cash flow offers a broader understanding of the company’s financial flexibility. Both are important in the negotiation process, but it’s essential not to confuse one for the other when assessing value. Determining a business's value is complex and requires evaluating multiple factors, including EBITDA, industry trends, the financial landscape, and the business's location.

For expert guidance on valuing your business, contact Alberta Business Sales today.

Jay Barrett Broker, Alberta Business Sales and Commercial Ventures

In 2023 Calgary has seen a large influx in population growth. This growth is not just from foreign immigration, but mainly inter-provincially with the most popular migrants coming from Vancouver and Toronto. In 2023 Calgary grew by 6%, or 96,000 new citizens; this outpaces all other cities in Canada. So why is Calgary the most popular destination in Canada and what does this mean in the Business Acquisition Industry?
 
Calgary is known as a major center for the energy industry, providing a stable foundation for the local economy. However, Calgary has diversified beyond energy, and now has an economy encompassing sectors like technology, healthcare, financial services, and manufacturing. Further, as of 2023, Calgary saw a record-high of 15,393 new homes built. This has created ample opportunities in new-home construction and residential targeted industries. The city's continued economic growth and development create ample opportunities for businesses to thrive.
 
So, what does this mean if you are looking to sell or purchase a business? Quite frankly, it means now is a great time to sell. There are many purchasers with their eyes on Alberta and Calgary and this includes a wide range of types of buyers. From individual and family buyers to private equity groups to strategic buyers who are looking to expand their current operations into a new market. About half of the buyers I work with are Albertans, with the other half coming out of country and out of province. This means many options for you as a seller and a much greater chance to find the right fit to continue your business and legacy.
 
For a purchaser it’s also great news. A growing market means more options available for purchase. A growing and diversified Calgary means many strong industries to choose from as well as many growth opportunities. Almost all of my current listings that are located in the Calgary greater area are either experiencing single month revenue highs, 5-10% revenue growth year over year and increased profitability as well. There are many long-standing Calgary businesses that are ready for a new owner to take them to new heights. Calgary is a very exciting place to be right now.

If you have been considering selling your business in the Calgary area and need help to navigate the process, reach out today!

Craig Panek Broker, Alberta Business Sales and Commercial Ventures

Selling a business is a significant milestone for any business owner. It can be the peak years of hard work and dedication, but the process can also be challenging. Understanding the common pain points can help business owners prepare better and navigate the complexities of a sale.

Here are some of the most common issues business owners encounter when selling their business:

1. Emotional Attachment: For many owners, their business is more than just a source of income, letting it go can be emotionally challenging.
2. Lack of Preparation: Many business owners underestimate the amount of preparation required to sell a business. Proper documentation, financial records, and a solid business plan are essential for attracting potential buyers. Below is a recent case study we’ve encountered that highlights this point.
3. Owner Dependancy: When a business becomes entirely dependent on the owner, it devalues the business, many buyers want to buy the business, not the owner.
4. Market Conditions: External market conditions can significantly impact the sale process. The market will dictate what you get for your business. Often, a business owner will have an unrealistic expectation of what their business is worth based on the numbers alone. Buyers will look at the broader economic climate, industry trends, and competitive landscape when determining the value of a business.

Buyers also consider non-financial criteria, such as:

• Customer Base: The size, loyalty, and demographics of the customer base can greatly influence a business’s attractiveness.
• Brand Reputation: A strong, well-regarded brand can add significant value and appeal to potential buyers.
• Operational Systems: Well-established and efficient operational systems indicate a smoothly running business, which is more appealing to buyers.

5. Transition Planning: Post-sale transition is often overlooked. Ensuring a smooth handover to a new owner is critical for the business’s continuity. This involves training, transferring key relationships, and many times staying on for a period to aid the transition.

A Cautionary Tale: The Importance of Proper Financial Preparation

Over the past 16 years, Alberta Business Sales has seen every type of business, and we can help owners address their concerns as they move to sell their business. One particular case stands out, illustrating the importance of meticulous financial preparation.

John, the owner of a successful manufacturing company, decided it was time to sell. Alberta Business Sales worked with John to find a suitable buyer, and both parties were eager to close the deal. However, when the buyer sought financing, the bank encountered significant issues.

Upon reviewing John's financial statements, the bank found them to be incomplete and somewhat disorganized. Cash flow was not clearly delineated, making it difficult to ascertain the true profitability of the business. There were discrepancies in reported earnings, and some expenses seemed to be missing or inaccurately categorized. Due to these financial irregularities, the bank could not confidently assess the value of the business or project future earnings. This uncertainty led the bank to deny the financing request, as the risk was too high without a clear understanding of the business's financial health.

This setback caused the deal to fall through, leaving both John and the buyer frustrated. This situation could have been avoided with better financial preparation and organization.

Selling a business can be a complex process. Being aware of these common pain points allows business owners to better prepare and address potential challenges. Seeking professional advice and planning thoroughly can help ensure a smoother, more successful sale. By navigating these pain points effectively, business owners can achieve a favorable outcome that honors their hard work. If you have been considering selling your business and need help to navigate the process, reach out today!

Heather Miller General Manager, Alberta Business Sales and Commercial Ventures

In most of the transactions we do here at Alberta Business Sales, there’s a bank involved. Financial Institutions such as ATB, RBC, BMO, and BDC are oftentimes integral in the ability to fund the purchase of a business. But when in a transaction is the right time to approach the bank? What documents will you need to get funding? Are some banks better than others to work with? Let’s take a look at some of the best practices we’ve learned in our 16 years of business at Alberta Business Sales. 

When Should I Talk To The Bank? 
 
The best time for you to begin talking to lenders is as early as possible. It’s good to have an idea where you stand in terms of your ability to acquire lending on a business early in the process. However, before reaching out to a lender, it is likely worth talking to the broker who is taking care of your file. They can help you understand the structure of a deal that might be acceptable to a buyer, which will be important information for the bank. As well, brokers often have relationships with lenders that can help make sure you are approaching the right people, who are not only capable of funding the deal, but are also able to do so in a timely manner. 

What Documents Will I Need? 
 
Different banks will have different requirements for what documents are going to be needed, and when in the process they will be required, but in general you should make sure your able to show a bank: 

• Who you are: ID's, any corporate documents if you own or apply as a corporation
• Your available funds: bank statements, existing debts, investment agreements, etc.
• Your action plan: Offers to purchase, general purchase structure, possibly sales projections
• Who you are working with: Lawyers, Accountants, Business Partners, etc.

Different lenders will have different requirements, but here is an overview of some of the documents you may be asking to provide throughout the process:

• Application for credit
• Details as to the amount of borrowing requested along with corresponding use of the funds
• Statement of Personal Affairs
• Government issued ID
• Last 3 years financial statements for the company you wish to purchase
• Aged list of receivables, payables and inventory as at last fiscal year end
• Most recent in house year-to-date balance sheet and income statement along with aged list of receivables, payables and inventory for the same period
• List of all new loans since last fiscal year end - to include amount outstanding and monthly payment broken down by interest and principle
• Organization chart with ownership breakdown - to include any holding companies and their ownership breakdown
• Name of lead bank (your main financial institution), along with contact details
• Name of accounting firm and accountant along with contact details
• Name of legal firm and lawyer along with contact details
• Executed share purchase agreement
• Confirmation of the source of your investment - bank statement (must include/show both names and amount available whether cash or line of credit)

If you’re working with Alberta Business Sales and planning to buy one of the businesses we have listed, often times a number of the documents required are covered by our Overview and Confidential Business Profile, which provides comprehensive information on the business that is for sale, their financial status, and what structures may be appropriate for the transaction. 

Are Some Financial Institution’s Better Than Others? 

Different financial institutions are willing to lend on business purchases in different ways. Each bank will have rules on how they do cash flow and asset lending. Some banks are more willing to provide cash flow lending, and some will almost only provide capital for asset purchases. If one bank turns you down, it is still likely worth your time to try out multiple places, as their different criteria is part of what differentiates them in the marketplace. 

If you’re not quite sure who the best bank to start with would be, or if you don’t know who to talk to at those banks, reach out to us today. One of our brokers would be happy to help guide you through the process. 

Getting your deal funded is an essential part of any acquisition. If you’re looking at purchasing a business, but have questions about the process, or want to know who you should approach in order to get funding, talking with one of our brokers would be a great place to start. 

Rob Schaeffer Broker, Alberta Business Sales and Commercial Ventures

Imagine the scenario: your friend proudly shares photo after photo of their newborn, convinced of their baby's unparalleled cuteness. Meanwhile, you're carefully navigating the fine line between honesty and tact, knowing that not every baby is universally adorable. Similarly, in the realm of business ownership, owners often harbor an unwavering belief in the value of their enterprises, nurtured over years of dedication and hard work. They've weathered storms, celebrated successes, and poured their hearts into every aspect of their operations, leading them to perceive their businesses as worth every penny they dream of when it's time to sell. But here's the reality check: not every business is as valuable as its owner perceives it to be. Just as not every baby is universally adorable, not every business commands top dollar on the market. It's a tough truth to swallow, yet an essential one for sellers to grasp. In this blog, drawing from our extensive experience as brokers, we'll navigate the complexities of these conversations, shedding light on the realities of business valuation and the art of confronting uncomfortable truths.

You Have Unrealistic Value Expectations:

Did you know, that over 70% of lower to mid-market businesses do not sell? Why do you think that is? You may be thinking, “my business would sell if I put it on the market today, I would be one of the successful 30% of owners that are able to sell their business for a profit.” Maybe you are right, but if statistics show us anything, you are likely not prepared to sell your business in its current state.

Most business owners see the revenue their businesses earn and assume that will transfer to high profits during a business sale. However, just because your business makes money, it does not make it valuable to a buyer. In fact, if the only thing you focus your energy on as an owner is revenue, your business is likely not valuable at all.  President and Owner of Alberta Business Sales and Commercial Ventures, Neil Gerritsen has had hundreds of conversations with business owners over the past 15 years and has this observation: "Many owners overestimate the value of their businesses, fixating on revenue figures while overlooking what truly drives value in the eyes of potential buyers. Emotion often clouds judgment, leading them to make decisions based on sentiment rather than a clear-eyed assessment of market realities."

Your “Well Documented Systems” are Actually Sticky Notes in a Trash Bag:

Another way of thinking about this: envision trying to piece together some IKEA furniture without the assembly instructions, three missing bolts, and the wrong size Allen wrench. It will be impossible to complete, and you will likely not make it five minutes into the process without cursing. Don’t put your potential buyers through this and expect great results or a sale.

You Get Cold Feet at the Thought of Leaving Your Business:

The reason business owners back out of the sale of their business is because they have spent the better part of their life working on their business. This business is quite literally their “baby” and the thought of giving their baby to someone else is the cause of great stress and regret. No potential buyer seems good enough to purchase and run your business, so you decide to back out before they get the chance. Neil states "Business owners often see their company as part of their identity, which can lead to feelings of unease about the future and moments of doubt or regret regarding their decision to sell.”

Proper planning for your next act helps to limit some of the stress and regret that can come with selling your business.

In conclusion, we've explored the intricate journey of selling your business, likening it to the universally relatable experience of showcasing a friend's "adorable" baby. With over 15 years of expertise at Alberta Business Sales and Commercial Ventures, we're committed to guiding you through every twist and turn of the sales process. Whether it's debunking unrealistic value expectations or emphasizing the significance of organized business processes, we're here to provide practical no nonsense advice.

Special credit to The Exit Planning Institute for the inspiration and insights in the creation of this blog.

Heather Miller General Manager, Alberta Business Sales and Commercial Ventures

Reach out to us today to learn more:

Vendor Take-Back, also known as Vendor Financing or Seller Financing, is a key component in business acquisitions. It refers to a portion of the purchase price—typically around 10-25%—that's withheld at the time of closing. Instead of receiving this amount upfront, the seller extends a loan to the buyer, to be repaid over a period of 2-5 years. Essentially, it means the current owner is lending money to facilitate the sale of their business.

For buyers, Vendor Take-Back offers several advantages. Firstly, it can enhance the likelihood of securing financing for the deal. Many banks and lenders require a portion of Vendor Take-Back as a condition for approval. Additionally, it can help maintain the seller's involvement in the business's ongoing success, which can be invaluable.

From the seller's perspective, offering Vendor Take-Back might seem risky, especially if their retirement funds are tied up in the sale. However, there are compelling reasons to consider it. Firstly, it often results in a higher overall value for the business, as it supplements the purchase price. Secondly, it can serve as a tax deferral strategy, minimizing the seller's tax burden. Furthermore, with proper protections such as security agreements and business recapture clauses, the risk can be mitigated.

In recent years, Vendor Take-Backs have become increasingly common in business deals. For example, in one instance, 17% of the total purchase price was held back, with deferred payments in the first year to support the buyer's financing needs. In another case, nearly 50% of the purchase price was structured as Vendor Take-Back to facilitate the acquisition of a business where the assets and equipment were valued similarly to the annual revenue. Such arrangements help both parties achieve their objectives in a mutually beneficial way. In conclusion, Vendor Take-Back can be a valuable tool for structuring deals that satisfy both buyers and sellers. By understanding its benefits and implementing it effectively, parties can navigate acquisitions with confidence and achieve favorable outcomes.

Craig Panek Broker, Alberta Business Sales and Commercial Ventures

If you have any questions on how vendor take-back works, or if it’s the right time to exit your business, reach out today: