Business Brokers and the Business Sales Market
Website design By BotEap.comSearching for business listings in Canada can be a frustrating and time consuming task. Compared to our neighbors to the south, Canadians don’t have much choice when it comes to an active market for small businesses for sale (relatively speaking, of course). So this leads to the natural question of why? Why is the business resale market in the US so much more active than here in Canada? That is the central theme that this article will explore.
Website design By BotEap.comCanadians are generally more risk averse
When buying a company or most other types of investments, Canadians are generally much more risk averse than Americans. Buying a business requires taking on a level of risk and a degree of entrepreneurship that can be found more often in our US neighbors. Website design By BotEap.comThe business brokerage industry is in its infancy in Canada
On a per capita basis, there are significantly fewer brokers in Canada than in the US. The industry is still nascent in Canada and ready to grow. Because of this, there are simply fewer corporate intermediaries in Canada to serve the needs of sellers, but especially buyers. Website design By BotEap.comsmall business financing
Americans have access to loan programs that, by comparison, do not exist in Canada. The US SBA has loan programs that will lend capital against a business’s assets, including goodwill, which is an intangible business asset. Website design By BotEap.comMultiple representation with business brokers
Because there are many more commercial brokers in the South than in Canada, some states are more prone to multiple broker representation of clients. What this means is that if a broker were to list a business for sale, he would accept the seller as a client. Since there are so many professionals specializing in the field of business brokerage, they may not necessarily find the buyer in the transaction. A different broker might find the buyer and then the two professionals would share the commission earned on the transaction. Website design By BotEap.comThis is not yet the case in Canada. Here, there are relatively few professionals who have the focus, skill, or experience of selling businesses. Commercial brokers in Canada generally handle both ends of the deal and accept both the buyer and the seller as their clients. This is called multiple representation or dual agency status. Website design By BotEap.comThe business resale market in Canada will grow exponentially due to the aging population and the number of businesses that need to be sold in the coming years. Because of this, the business brokerage industry in Canada will grow and mature and begin 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 the clients.
When buying a company or most other types of investments, Canadians are generally much more risk averse than Americans. Buying a business requires taking on a level of risk and a degree of entrepreneurship that can be found more often in our US neighbors. Website design By BotEap.comThe business brokerage industry is in its infancy in Canada
On a per capita basis, there are significantly fewer brokers in Canada than in the US. The industry is still nascent in Canada and ready to grow. Because of this, there are simply fewer corporate intermediaries in Canada to serve the needs of sellers, but especially buyers. Website design By BotEap.comsmall business financing
Americans have access to loan programs that, by comparison, do not exist in Canada. The US SBA has loan programs that will lend capital against a business’s assets, including goodwill, which is an intangible business asset. Website design By BotEap.comMultiple representation with business brokers
Because there are many more commercial brokers in the South than in Canada, some states are more prone to multiple broker representation of clients. What this means is that if a broker were to list a business for sale, he would accept the seller as a client. Since there are so many professionals specializing in the field of business brokerage, they may not necessarily find the buyer in the transaction. A different broker might find the buyer and then the two professionals would share the commission earned on the transaction. Website design By BotEap.comThis is not yet the case in Canada. Here, there are relatively few professionals who have the focus, skill, or experience of selling businesses. Commercial brokers in Canada generally handle both ends of the deal and accept both the buyer and the seller as their clients. This is called multiple representation or dual agency status. Website design By BotEap.comThe business resale market in Canada will grow exponentially due to the aging population and the number of businesses that need to be sold in the coming years. Because of this, the business brokerage industry in Canada will grow and mature and begin 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 the clients.