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The Canadian Business Sales Marketplace

Guest post by: Steve Skrlac

Article Overview: Searching for business listings in Canada can be a time-consuming and frustrating endeavour. In comparison to the U.S., Canadians do not have much to choose from when it comes to an active small business for sale marketplace (relatively speaking, of course). This article examines some of the reasons why.

The Canadian Business Sales Marketplace

Searching for business listings in Canada can be a time-consuming and frustrating endeavour. In comparison to our neighbours to the south, Canadians do not have much to choose from when it comes to an active small business for sale marketplace (relatively speaking, of course). So, this leads to the natural question of why? Why is the business for sale market in the US so much more active than it is here in Canada. That is the central topic that this article shall explore.

Canadians are generally more risk averse

When buying a business or most other types of investments, Canadians are generally much more risk averse than Americans. Buying a business venture requires assuming a level of risk and a degree of entrepreneurialism that may be more frequently found in our US neighbours.

The business brokerage industry is in its infancy in Canada

On a per capita basis, there are significantly fewer business brokers in Canada than there are in the US. The industry is still nascent in Canada and poised for growth. Because of this, there are simply fewer business intermediaries in Canada to service the needs of sellers, but especially buyers.

Small business financing

Americans have access to small business lending programs that, in comparison, do not exist in Canada. The US SBA has lending programs that will lend capital against a business’s assets – including goodwill, which is an intangible business asset.

Multiple representation with business brokers

Because there are many more business brokers in the US than there are in Canada, some states are more prone to MLS representation of clients by business brokerages. What this means is that if a business broker were to list a business for sale, a business broker might only take on the seller as a client and not focus on finding the buyer. Since there are so many professionals specialized in the field of business brokerage in some states, a business broker may not necessarily find the buyer in the transaction. A different broker may find the buyer and then the two professionals would share in the commission earned on the transaction.

This is not the case yet in Canada, for the most part. Here, there are relatively few professionals that have the focus, skill or background in selling businesses. Business brokers in Canada usually handles both ends of the deal and take on both the buyer and seller as their clients. This is called a multiple representation or dual agency situation.

The business re-sale marketplace in Canada is set to grow exponentially due to the aging population and the number of businesses that must be sold in the coming years. Because of this, the business brokerage industry in Canada will grow and mature and start to resemble the industry as it exists in the US. The end results should be a more liquid market for buying and selling companies and a better overall experience for clients.

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Article Tags: business, buying, canada, sales



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