Business Transition Financing for Ownership Changes in BC & Alberta
At Legacy Mortgage Group, we understand that the decision to transition your business or purchase an operating business isn’t an easy one, and we want to help you as much as we can with this significant change in your life.
We provide specialized business transition financing solutions to support ownership changes, management buyouts, and succession planning across British Columbia and Alberta. We know that business operations during this time are a key consideration, so we’ll make this process as easy and efficient as we can.
Our team helps you understand and evaluate your options. With access to a broad lender network, we secure competitive pricing and terms while working directly with your accountants and legal counsel to reduce friction and risk.
Business Transition Financing Requirements in Western Canada
Successfully securing a business transition loan in Alberta and B.C. requires meeting specific qualification criteria. Our expert team is happy to help you navigate this process with clarity and confidence. We guide you through the financial requirements that lenders evaluate, ensuring your application is as strong as possible.
This process can be complex, with many moving parts and another party in the equation, but don’t feel overwhelmed – we know you’re already going through enough change right now, so let us handle the nitty-gritty. We’ll keep you informed every step of the way!
What Financial Documents Are Required for Selling a Business?
A key to a streamlined process is having all your documentation prepared. Our team helps you with the comprehensive documentation needed for business transition financing applications. We’ll work with you, your accountant, and your legal team to ensure everything is in order.
Financial Statements
This includes detailed financial statements for the business, and a personal net worth statement for the new owner.
Business Plan
A detailed business plan with in-depth financial projections is needed to prove the business will be profitable long-term.
Business Valuation Reports
A professional business valuation is often required to determine a fair market price for the ownership transfer.
Legal Agreements
All legal agreements, such as a succession plan or a management buyout agreement, must be included in the application.
Once your paperwork is in order, the next step is understanding the different ownership change scenarios we can support—and how each requires a tailored financing approach.
Types of Ownership Change Solutions We Support With
Every business transition scenario is unique, and impacted by a number of factors. We provide a customized approach to business acquisition funding to ensure the specific needs of your ownership transfer are met.
Management Buyouts (MBOs)
We specialize in helping clients secure MBO loans, where existing managers purchase the business from current owners.
Partner Buyouts
We provide ownership transfer solutions for a co-owner buyout, helping to facilitate a fair partner exit.
Family Business Succession
We assist with multi-generational succession planning and family transitions.
Third-Party Acquisitions
We can assist with funding for a third-party acquisition, including both asset and share purchases.
Once your paperwork is in order, the next step is understanding the different ownership change scenarios we can support—and how each requires a tailored financing approach.
How Business Transition Financing Works
Understanding your needs
We’ll begin by getting to know you and what your income, lifestyle, debts, and financial goals are. This will help us recommend an approach and determine what you can qualify for.
Financial review
Once we know more about you, we’ll work with you to come up with a strategy that aligns with your goals and needs.
Negotiating with lenders
Leave the hard part to us. With experience, professionalism, and expert knowledge, we leverage our network of over 50 lenders to get you the best rate and term for your budget and needs.
Closing support
Our team provides full assistance through legal documentation to ensure a seamless closing.
Depending on complexity, the timeline can range drastically, typically falling between 2 months – 1 year. Regardless of the duration, you can be assured that we’ll keep you updated along the way.
Now that you know the process and timeline, let’s look at why specialized transition financing offers advantages over traditional business loans.
Business Transition Financing Benefits and Solutions
Choosing specialized business transition financing over a traditional loan provides numerous advantages, including preserving your business continuity and cash flow during ownership changes.
Flexible Repayment Structures
We work with our network of lenders to get you competitive rates and flexible repayment structures that align with your business’s financial health.
Business Continuity
Our comprehensive approach ensures that the business maintains its day-to-day operations with minimal disruption during the transition.
Cash Flow Preservation
We offer solutions that can help you preserve your business’s cash flow and reduce the financial burden of a large acquisition.
Employee and Customer Relationships
Our goal is to ensure a smooth transition that protects your business relationships, preserving your team and your loyal customers.
Beyond these benefits, the right financing structure safeguards your operations during a sensitive period. Here’s how Legacy helps you maintain stability while ownership changes hands.
How Does Expert Business Transition Financing Protect Business Operations?
We know that strong business continuity during transitions is a priority, and specialized financing structures are key to ensuring operational stability. We help you create a seamless transition that protects your employee retention, customer relationships, and business momentum.
By carefully and proactively planning ahead, we ensure that your team remains confident in the company’s future and that your customers continue to receive the great service they expect, with no interruptions during this transition.
Are you transitioning your business to a family member? Family transitions add another layer of complexity. Let’s dive into the unique challenges and solutions for multi-generational businesses.
Leasehold Improvement Requirements in Alberta and BC
You know what they say: don’t mix business and family. But for generational businesses, there’s no way around it! And, good news: there’s a way to do it and keep your family dynamic strong and business operating without disruption!
Some unique challenges during family transitions include family dynamics, tax implications, and ensuring fair valuations. Luckily, our team has extensive experience with family transitions for businesses, and can support a seamless, fair transition, where both sides are satisfied, preserving family relationships and business success.
Let’s get into the tax implications of family transitions and how these might impact your strategy. Here’s what you need to know about optimizing tax outcomes during a transition.
Tax Considerations for Business Transition Financing in Canada
Taxes can have a big impact on how much money you keep after selling or buying a business. Here are the basics:
Lifetime Capital Gains Exemption
If you sell shares of a qualifying small business, you may not have to pay tax on up to $1.25 million of the gain. This is a major tax break for many owners.
Capital Gains Inclusion Rate
When you sell a business, part of the profit (the “gain”) is taxable. The timing of your sale can affect how much tax you pay.
Share Sale vs. Asset Sale
Selling shares and selling assets are taxed differently. One option may save you more money than the other, depending on your situation.
Why it matters
Choosing the wrong structure or timing could cost you tens of thousands in taxes. Legacy Mortgage Group doesn’t provide tax advice, but we work closely with your accountant or tax advisor to make sure your financing plan supports the best tax strategy for your deal.
Business Transition Financing Benefits and Solutions
The departure of a business partner can be complex, not too dissimilar from a divorce. We can assist with a variety of exit scenarios, including voluntary departures, retirement buyouts, and other dispute-related separations. Our financing solutions can facilitate a fair partner exit while preserving business operations and remaining partnerships.
Once you’ve decided on a buyout, the next step is structuring the agreement. Here’s what goes into creating a fair, legally sound, and financially sustainable deal.
How to Structure Partnership Buyout Financing Agreements?
Our goal is to support you with a fair partnership buyout financing agreement. This involves a lot of calculations, but if done properly by experts, can leave both sides feeling that the deal was fair given the circumstances.
Some of these calculations include valuation methods (either independent appraisal or a formula calculation), payment terms (earn-out, cash, or other options), debts, and more.
Ready to Get Started?
Regardless of your reasoning for seeking business transition financing, choosing the right broker partner is the key to a successful ownership change. We provide comprehensive support throughout the process, from initial consultation through final funding. Our expertise helps you navigate the financial complexities, with as little interruption to business operations as possible.
Ready to plan your business’s future? Contact us for a confidential consultation about your business transition financing needs.
