Taking Over a Business: From Intention to Acquisition — Steps to Ensure You're Well Prepared

On October 20, as part of the RDV Repreneuriat event organized by the Chambre de commerce du Montréal métropolitain (CCMM) and the Banque de développement du Canada (BDC), PME MTL led a workshop focused on the journey of business buyers. A session to gain a better understanding of the steps involved in an acquisition, the challenges to anticipate, and the resources available to bring a business acquisition project to reality.

Business Succession: A Major Challenge for Quebec's Economy

In Quebec, business succession is a key issue for the sustainability of small and medium-sized enterprises (SMEs), job preservation, and economic development.

According to data from Repreneuriat Québec presented during the workshop, 38,000 businesses will need to find a buyer by 2029, while 16,000 are considering a sale or transfer of ownership over the next 12 months.

Beyond ensuring business continuity, business succession also presents a growth opportunity for entrepreneurs who wish to take over an established business.

Unlike starting a business from scratch, a business acquisition generally allows entrepreneurs to build on an existing customer base, recurring revenue, an established team, and well-established processes. However, it comes with its own challenges: accurately valuing the business, securing the necessary financing, and ensuring a smooth transition.

From Concept to Reality: A Business Buyer’s Journey

To provide a concrete illustration of the various stages of an acquisition, Jean-Armand Nkoma, a CPA auditor and founder of NKM CPA, shared his experience as a business buyer.

After founding his accounting firm in 2023, he chose to continue growing his business by acquiring an established firm — a move that allowed him to expand his client base and strengthen his presence in the accounting services sector.

Led by Ada Panduro, Director of Innovation, and Max Lino, Director of Consulting Services and Financing at PME MTL Centre-Ouest, this discussion explored several key questions: How can you identify an acquisition opportunity that aligns with your goals? What due diligence should you conduct before committing? How should you structure the financing and prepare for the transition with the seller?

The panel discussion highlighted, in particular, the importance of looking beyond financial results when evaluating a business. Customer stability, existing commitments, and the risks associated with the transfer of operations are all factors to consider.

Preparing for Your Acquisition: Key Takeaways

Several key points emerged from this meeting.

1. Choose a business that aligns with your goals. Before taking any steps, it’s important to define your profile as a buyer, your ambitions, and the criteria that will guide your search for a business.
2. Take the time to conduct due diligence. Due diligence helps you better understand the target company’s financial situation, operations, obligations, and potential risks.
3. Structure the financing from the outset. An acquisition generally requires a financing structure that combines various sources of funding. You must also set aside the necessary cash to support operations after the transaction.
4. Prepare for the transition. Signing the sale agreement does not mark the end of the process. Knowledge transfer, maintaining customer relationships, and integrating operations are critical for the future.

These steps serve as a reminder that an acquisition depends not only on a good business opportunity, but also on the buyer’s ability to prepare for and carry out the transaction.

Surrounding Yourself with the Right Resources at the Right Time

Business acquisition requires expertise in various areas: financing, business valuation, taxation, law, and business development.

Throughout this process, PME MTL can assist entrepreneurs in validating their business plans, structuring their financing arrangements, and identifying relevant resources. Financial institutions, accountants, tax professionals, lawyers, and organizations specializing in business acquisitions can also contribute at various stages of the process.