From preparation to signing: the due diligence checklist to sell your business serenely

Selling your business is often one of the most important decisions in an entrepreneur's career. It's the moment when years of effort translate, or don't, into tangible value. Yet, the majority of owners in Quebec don't follow a clear plan before putting their business up for sale.

The risk? Seeing the transaction fail or accepting a price well below what it's actually worth. A rigorous due diligence checklist is the best tool to avoid these mistakes.

A successful sale doesn't depend solely on finding a buyer. It relies on the ability to prove that the business is solid, profitable, well-structured... and ready to operate after your departure.

By following a due diligence checklist, we protect three essential aspects:

• Value: maintain or increase the sale price.
• Taxation: legally reduce tax on the transaction.
• Legal security: avoid post-sale litigation.

Three typical situations

1. The rapidly growing business: the leader believes that growth alone will be enough to attract buyers. They neglect internal documentation and contracts. Without a checklist: delays in the sale and loss of confidence. With a checklist: key contracts secured, figures validated, quick negotiations.

2. The family business: everything is managed "the old way," sometimes with verbal agreements. Without a checklist: tax risks and family conflicts. With a checklist: adapted structure, maximized capital gains exemption.

3. The business dependent on its founder: clients come for them, not for the brand. Without a checklist: reluctant buyers. With a checklist: establishment of an autonomous team and documented processes.

The essential tax and legal levers of the checklist

• Analysis of the shareholding structure and adjustments to maximize tax benefits, such as the capital gains exemption, by ensuring that conditions are met in time. Example: a leader adjusts share ownership through a family trust, allowing several family members to benefit from the exemption.

• Optimization of asset transfers to isolate what will be sold from what will remain in the corporate group. Example: a service company withdraws its vehicle fleet into a separate company before the transaction, thus avoiding taxation on these non-essential assets.

• Implementation of protection and intergenerational planning mechanisms, such as creating a management company or integrating life insurance into the overall strategy. Example: by adding corporate life insurance, an entrepreneur ensures the liquidity needed to settle taxes at death, without affecting operations.

Practical case

A Quebec manufacturing company followed this approach over two years: revision of shareholder agreements, transfer of non-strategic assets, complete tax audit, and integrated succession planning.

Result: during the sale, the accepted offer exceeded the estimated value by 25%, and the strategies implemented saved over $500,000 in taxes.

What we often forget

• Dormant liabilities: an old lawsuit or forgotten debt can resurface and delay the sale.
• HR documentation: incomplete employment contracts, poorly documented benefits.
• Psychological preparation of the seller: an owner poorly prepared to detach can slow down the transaction.

Essential questions for the due diligence checklist

• Do I have clear and recent financial statements?
• Are all my key contracts written and up to date?
• Does my business structure maximize available tax advantages?
• Can my business operate without me?
• Have I properly identified the assets to exclude from the sale?

Without a due diligence checklist, you risk:

• losing a serious buyer;
• suffering a downward valuation;
• paying unnecessarily high taxes;
• prolonging the sale by several months, even years.
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A due diligence sale preparation checklist is not a luxury, it's a necessity. It allows you to transform your business's potential value into real value, while protecting your interests. Start early, act methodically, and you'll increase your chances of completing a fast, profitable transaction without unpleasant surprises.

To receive a complete checklist, write to us mentioning "CHECKLIST" in the subject line.