If you plan to sell your restaurant business any time soon, you should first look through all financial and legal aspects that may influence the purchase. Although these steps may be challenging and overwhelming, they are essential for potential buyers, so make sure all financial records and legal aspects are in order before you decide to sell your business.
We will dive deep into all the elements and restaurant sale legalities in Canada you should look out for to prepare your restaurant for the new owner.
Below are some of the main legal and financial considerations when selling your restaurant.
Evaluating your restaurant business is key
The value of your business can significantly impact the outcome of the purchase. You should determine the actual value before you decide to sell your restaurant. You will create a realistic price, ensuring you get the most out of your sale. Below are some things that will help you determine the asking price.
Physical aspects and market conditions
Evaluating the physical aspects of your restaurant is essential for creating a sale price, but to determine the value, you should compare your property to other deals on the market. For instance, you should see how much kitchen equipment your restaurant has and whether the new owner needs to invest more money to make the restaurant business usable.
Traffic and workflow
The traffic you receive is another aspect that will help you determine the sale price for the restaurant. If your restaurant is busy, with a solid business structure, and you have a loyal customer base, the return on investment will be higher. The buyer will know they will earn a profit when they open a new establishment.
Every new owner is looking for opportunities that will enable them to grow their career. You should consider whether your business is expandable and to what extent to be able to sell it for the highest price.
Gathering financial records
Accurate financial performance and statements will help you build trustworthy relationships with potential buyers. You should be transparent about your activities and be able to present all of the profit and loss statements of your restaurant business to ensure a sale. The buyer will have complete information about the company and know whether purchasing the restaurant will be a good investment.
Before you join the restaurant sales section, you should gather your balance sheets, tax returns, profits and losses, and other essential elements to prove your financial performance. Once you collect everything, categorize the documents according to the date and time.
Review the statements before presenting them to interested parties. Resolve all discrepancies or issues you may have with your finances. Working with financial advisors and professionals can help improve the selling experience – they will know how to collect and present accurate data, thus building even more trust with the potential buyer and allowing you to sell at the highest price.
Hiring a business broker for the best experience
A certified business intermediary can be of crucial importance for selling restaurants. Their expertise can contribute to getting the most money, building trust with the buyer, and selling the restaurant in a record timeframe. If you want to ensure the best sale for your restaurant, hiring a professional may be the best choice, especially if you have no experience in the business sales industry.
A business broker will help identify the best buyers and create negotiation strategies to get the most out of your restaurant sale. You will surely get a better deal if you decide to take this step and invest in professional help.
Choosing the best broker
Choosing the best broker may take some time and effort. You should review your opportunities and choose the professional you best communicate with, and you can also seek recommendations from previous owners.
Additionally, you can choose a professional based on their pricing strategies. Some work on commission, and some have fixed rates, so you should opt for a payment option that best fits your budget and preferences when selling a restaurant.
Once you hire a professional, you should ensure transparent communication and tell them everything about your small business administration. They should have insight into your business structure to create the best sale price and terms.
Reviewing legal aspects
Legal aspects are among the most critical elements to consider when selling a restaurant. This aspect will determine whether your sale will flow smoothly and uninterruptedly. Moreover, legal factors will influence the buyer and help them decide whether to purchase your business.
Resolve any legal issues you may have in your restaurant to transfer ownership to the next person after you sell it. Let’s check out some of the aspects you should review before listing your restaurant for sale:
- Licenses – as you may know, every restaurant needs special permits to be able to sell food and drinks. Check whether you have the right food and liquor licenses beforehand to avoid legal issues.
- Contracts – if your business structure includes employees, you should ensure all agreements are in order and up to date. You will avoid possible liabilities.
- Permits – ensure you have all the necessary permits for running a restaurant company.
- Tax clearance – you should also prepare additional documents, such as tax returns and clearance, so that the buyer will have insight into financial aspects.
- Due diligence documents – another important legal aspect is conducting due diligence before the purchase.
Collecting legal documents will depend on your specific business, so gather every last bit to ensure the best restaurant sale. You should postpone selling your restaurant if there are any ongoing lawsuits or trials against your business. You should first resolve all legal issues that may influence the sale and then list your business.
Restaurant sales rely heavily on legal aspects, so you should review all of your documents at least twice to make sure your restaurant is ready for sale. Legal liabilities may also contribute to the purchase complexity, thus prolonging the purchase timeframe.
Preparing the restaurant for potential buyers
After collecting all the financial statements and legal documents, it is time to prepare them for viewing. The potential buyers will want to see profit and loss statements, plans, taxes, contracts, agreements, permits, and other documents before purchasing the restaurant.
Grab a binder or any other organizational tool to categorize your documents and make them presentable. You can do this with the help of your broker to be able to create the best presentation. After combining all of these steps involved in making a sale, you will be ready to find your potential buyers!
Review all of the aspects once again to make sure everything is in order. Don’t forget to communicate with the buyers to create a welcoming, positive atmosphere.
The Bottom Line
Trying to sell your restaurant may seem overwhelming, but with the right help and advanced organizational skills, you will turn your experience around. Today, we have discussed the legal and financial aspects of selling your business. Follow the steps mentioned above to learn how to evaluate your business and prepare it for sale. Happy selling!
Where can I sell my restaurant?
If you are looking for a place to sell your food franchise, you are in the right place. Our website was designed to help you connect with the perfect buyer and create the best agreement. You can list your business on our website, and we will help you make the sale.
How to find the right audience?
Finding the right audience for selling your company may be difficult. You should consider your restaurant’s type and create a general marketing strategy. You can also consult with professionals who will detect the perfect audience for you.
How can I determine the value of my restaurant?
Viewing physical aspects and market trends is the first step towards determining your restaurant’s value. You can compare your property to nearby ones and get an approximate valuation. Moreover, you should review your finances, legal aspects, and growth opportunities, influencing the outcome. Our advice is to hire a professional.