The Booming Business for Sale Market in The Greater Toronto

Just like the Real Estate market, the business for sale market seems to be booming these days in Toronto. As a business broker in Toronto I can feel that fewer business owners are currently selling their businesses while the number of business buyers has increased dramatically in the past few months and continues to increase.

On the one side, this rapid increase in demand for businesses for sale could be explained by the following reasons:

1. Business buyers have retrieved confidence in the economy thanks to the hope for economic recovery. Perspectives for the future seem much better than before and buying a business today is certainly a smart way to take advantage of this recovery.
2. Business valuations are currently relatively low both because of lower multiples and because of lower profits made by businesses in 2008 and 2009. Multiples will certainly increase if the recovery is confirmed as well as profits. Prices will increase as a result.
3. A large number of laid-off employees are seriously looking to business ownership as a an alternative to finding a new job.
4. The general growing trend of corporate outsourcing is becoming more prevalent so that traditional employment is been replaced by contract work. Buying a small business that fulfills this corporate need is an attractive alternative to traditional employment.

On the other side, the decrease in supply of businesses available for sale could be explained by the following reasons:

1. A large number of small business owners expected to sell their businesses and retire cannot do so because their retirement funds have taken a serious hit due to the recent declines in the stock market. These owners are postponing the sale of their business for some more few years until their retirement funds recover.
2. Business owners prefer to wait some more years until the economy fully recovers so they can sell their businesses at a much higher prices.

These are some of the reasons that explain the increased current demand and decreased supply of businesses for sale that will ultimately lead to and increase in the prices for small businesses.

New Businesses for Sale in Toronto

We have recently added some new businesses available for sale. Please browse the links bellow for more information about these companies:

Middle Market Companies:

Food Manufacturing and Distribution in Mississauga: Sales of more that $8.2M and EBITDA around $600,000. The business is very well organized and in a high growth mode thanks to its superior products. Priced only $1.6M for the assets which include more than $1M in Stock and receivables. This is a unique opportunity in the food industry that should not be missed.

Business with Real Estate:

Banquet Hall and Convention Centre in the Hamilton, Ontario Area: Priced $4.49M. 32,000 s.f. State of the art banquet hall facility included in price. Very high growth business despite the recession thanks to the booming wedding market in Ontario. Huge renovations are been added.

Small Businesses for Sale:

Pet Grooming Business: Extremely profitable. A real gold mine. huge opportunity in the high growth pet grooming market. buyer need to be willing very hard to make a lot of money.

Information Technology Services: Priced only $150,000 with profits above $170,000 in 2008. real bargain for an IT experienced entrepreneurial buyer. Huge undeserved IT service market.

Commercial Kitchen Equipment Import Distribution and Servicing:This company has been very successful in importing high quality non-branded kitchen equipment and servicing it in the GTA West Area. Very profitable with huge growth prospects.

For other Business opportunities in Toronto GTA, please visit our business for sale website.

WHY BUY A BUSINESS IN TODAY’S MARKET?

There is no doubt that the economic downturn has made many potential buyers reluctant to move forward to purchase a business. But in many ways, this is the best time. Because most people are nervous and unsure of what is happening, it is much less likely that new competition will open up until they are sure the recession is over. This means that someone buying an existing business, is unlikely to face competitive pressures for some time.

When the economy is growing and there is more good news than bad news, many people open a new business in competition with those that are successful, knowing that even if they get a small piece of the pie, the pie is getting bigger and bigger. There is much less risk involved when the economy is growing.

Even if there is new competition, it costs a lot of money to start a business and to market and get new customers to the point that it’s making money. It is probable that the new business will not be able to survive, as they are not only opening in a challenging market, but trying to grow the business. Also they are probably making many mistakes because they are new, and have to figure out what works and what doesn’t. As most business owners will attest to, there are many mistakes, most of them costly, in the first few years of opening their business.

Selling a Business in Toronto

As a business broker in Toronto, I constantly receive phone calls and email form business owners looking into selling their businesses. Unfortunately, a large number of business owners have a misconception about the reasons why they should sell their Toronto businesses. There is a common belief that you only sell a business when you don't make money or when something is fundamentally wrong with the business. This can not be further from the truth.

The reality is that very few non profitable businesses actually sell. Most business buyers are simply looking for a job replacement, a way to make a living. A business with serious profitability problems can not help these potential buyers.

My advice to business owners looking to sell an unprofitable business is to explore other venues. Sometimes, some small actions can dramatically increase the business profits. Sometimes it's more realistic to simply shut the business down and sell the assets. Continuing to operate a money loosing business on the hope that a potential buyer will come is very naive.

In some rare circumstances, a larger business buyer can purchase the business and reduce its costs thanks to large economies of scale or scope from its current business. I recently sold a large manufacturer of promotional products who was loosing money. The buyer integrated it with its current business and was able to cut costs dramatically. The buyer also used the current clients and sold them other products.

In general terms businesses who are profitable and have a consistent track record of profits are in demand and generally sell in reasonable time. On the other hand, businesses with no track record or unprofitable businesses have very low chances of selling unless they are attractive to larger companies very active in the mergers and acquisitions market.

Become a Business Broker in Ontario

In my recent post about business brokers regulations in Ontario, Canada, I outlined some regulations in the Real Estate and Business Brokers Act (REBBA 2002) requiring that business brokers (individuals or companies involved in the purchase and sale of businesses) be registered with RECO (Real Estate Council of Ontario).

In fact, Trading in Real Estate requires a registration with RECO and Real Estate includes business for sale in the meaning of REBBA 2002. There are however some exceptions to this requirement. For example, a lawyer acting on behalf of his client is exampt. Another exception is an individual licenced under OSC (Ontario Security Commission) who is involved in the purchase and sale of the shares of a company.

Some non registered "mergers and acquisitions" companies/individuals tried to exploit this loophole by getting licensed under OSC, which could be obtained after passing a written test and generally requires much less education/experience and is obtained in a shorter period. These companies/individuals frequently found themselves in breach of REBBA when a deal initially started as a share purchase turned out into an asset purchase and therefore required registration under REBBA. Most transactions see their structure (SHARES vs. ASSETS) change during the transaction depending on the change in the bargaining power between sellers and buyers and the tax benefits vs. legal and potential tax liabilities.

Furthermore, smaller transactions (value less than $1M) are generally asset transactions since doing a full investigation to determine potential liabilities is seen as too expensive and not worth the expenses given the size of these transactions. As a result, business brokers involved in the purchase and sale of small to medium size companies should generally get licensed under REBBA to practice their profession legally.

New Companies for sale in GTA

We have added some very interesting businesses for sale to our website. We have noticed that business owners now understand that given the current economic conditions, they have to be realistic about their asking price if they are serious about selling their business.

We put a lot of efforts to evaluate businesses we list so that we increase the likelihood to sell them. Below are the businesses that we have listed recently:

High End Millwork Manufacturing: This is a cabinetry and woodworking company specialized in luxury work. The company also imports millwork related articles and sell them directly to builders and private clients. The company is profitable and has a large well organized facility.

Flower Stores for Sale on Sudbury: e successful flower shops in Sudbury and regions with state of the art computer programs and a high traffic ecommerce website.

Screen Printing on Clothing for the Promotional Industry: Long established company with a track record of profits and a large customer base of corporate clients and brand names. Very well prices. Almost a steel. Would be perfect with an entrepreneurial individual with good business acumen and good work ethics. Management experience is a must.

Business for Sale in the Greater Toronto Area

We have created a new website for business for sale listings in the GTA. Business listings are ranked from the lower to the higher priced. A small summery describing the listings is on the right. The website also clarifies some myths about how to sell or buy a business in Toronto GTA.

While the website is a company website with the aim to attract potential business buyers and sellers to our business brokerage services, it also offers valuable advice to business sellers who want to sell their businesses on their own. Generally this is not a wise decision to make but in some special circumstances when the value of the business is too low, when the seller has a lot of time available to dedicate the the sale of his business and/or when confidentiality is not an issue when in the sale of a business.

Business buyers will also find valuable advice on the business purchase process. It is clearly explained that buying a business in a extremely complicated task that has to be taken very seriously to be successful. The odds are generally against business buyers since only one out of ten potential buyers end-up buying a business. reason for these unfavorable statistics include buyers lacking basic knowledge about the business purchase process, buyers not emotionally ready to buy, buyers with insufficient funds to finance the acquisition, the low number of business listings compared to the number of potential buyer etc.