It might seem counterproductive, possibly even bad mojo, to include a business exit strategy in your initial business plan. But planning for this eventuality is an important part of building your business. 

When the time comes, having a plan in place will help make the transition smoother and ultimately more profitable. In reality, it’s never too early to start thinking about your small business exit strategy. The strategy you formulate now will inform other business decisions that support your goal. 

Your company exit strategy is essentially how you plan to leave and sell the business. Maybe acquisition is your ultimate goal or you plan to transfer ownership to someone you know. The business exit strategy steps you take will depend on the nature of the business sale. Read on to learn about the three most common small business exit strategies.


3 Common Business Exit Strategies

1. Selling to a Successor

Selling your business to someone you know — be it a family member, employee or business partner — offers some peace of mind. You’ve had time to mentor and prepare the buyer and you feel confident they’ll be able to seamlessly transition into the role. You may also have an opportunity to maintain some involvement in the business.

Beware, however, that sometimes personal relationships and business transactions don’t mix well. There may be some pressure to offer a ‘friends and family discount’ and it can be challenging to align personal and business expectations. Enlist expert help in the form of accountants, legal advisors, and someone familiar with business exit strategy consulting to help navigate the process.

2. Liquidation

One of the simplest and often quickest ways to close a business, liquidation involves selling off the business assets, such as land, buildings, and/or equipment. Often the last resort for businesses unable to find a successor or third party buyer, liquidation doesn’t account for intangible items of value such as business relationships and customer lists, and any liquidation profits must be used to pay off debts first.

Before liquidating, you’ll want to consult liquidation experts who can advise on the legal and financial protocols required to properly sell your assets, settle debts, and manage the closure of the business. Liquidation is arguably not an exit strategy so much as a backup should your original exit strategy fail to unfold as planned.

3. Selling to Another Business (Acquisition)

With a merger or acquisition, your business is purchased or merged with another company. Often the company that acquires your business is looking to incorporate your services or products into their current offering, or is looking to expand into new territory or absorb their competition in the market.

Whatever the reason, if your business is particularly attractive to the right buyers, you’ll be in a great position to negotiate an excellent sales deal. There is also some flexibility in terms of negotiating your ongoing involvement or ensuring a clean exit — whatever you prefer. This is typically the ideal exit strategy to ensure you get the best possible value for your business. 

Curious to know a ballpark figure valuation for your company? Our Business Valuation Calculator can help get you started. 

Share Sale vs Asset Sale: How to Benefit from Capital Gains Treatment

Tax implications are an important consideration when selling your business. Canadian business sellers will either sell their business in a share sale or an asset sale.


Share sale: An individual sells their shares of a private corporation directly to the buyer.


Asset sale: A company sells some or all of its business assets (inventory, equipment, contracts, intellectual property, etc.) to a buyer, but the company itself is not sold. The seller retains ownership of the company as a legal entity.


To benefit from capital gains treatment, a share sale is preferable. Proceeds of the sale of shares (in excess of the adjusted cost base of the shares and specific expenses incurred as a result of selling the shares) are considered a capital gain and are only 50% taxable.  In addition, the seller may be able to benefit from the Lifetime Capital Gains Exemption if the shares are considered Qualified Small Business Corporation (QSBC) shares. Specifically, the seller may be able to shelter all or part of the resulting capital gain from tax.


Keep in mind, a share sale may result in a lower selling price compared to an asset sale as the buyer generally takes on greater risk and tax liabilities.


A professional business broker can help review the options with you and provide expert advice that will help structure the best business sales deal for your needs.


Contact a business broker in Edmonton or Calgary today.

Prepare for Life After Business Ownership

Whether the sale of your business marks retirement or simply a career pivot, you’ll want to prepare for the emotional toll that selling a business takes. Plan a vacation for the week after the sale closes or throw a party to celebrate the end of this chapter in your life.


Preparing an exit strategy, one that you continuously revisit and revise as you build your business, will ensure you get the best business sales deal possible. With that you can wake up the next day financially secure and confident, ready to take on whatever new challenges life has in store for you.

Want to make sure your business exit strategy will take you where you want to go next? Book a free one-hour consultation with ABS today.