Selling a business in the Greater Toronto Area!

The GTA is one of the most active economic regions in North America and that is a huge advantage for business sellers.

Three unique aspects make selling a business in Toronto much easier and more lucrative than in most other cities in North America:

  • Ethnic diversity of its population: Diversity is good for business and can make markets much more liquid (frequent transactions). Different ethnic populations have different perceptions of happiness and different needs, so a business that doesn’t fit with people from a particular ethnic background might be an excellent fit for another ethnic background. For example gas stations and convenience stores require long hours of work and provide a relatively low return on investments. In spite of these disadvantage, these businesses are in great demand especially from recent immigrants. A number of recent immigrants lack language skills to operate a business with high social interaction so they perceive this type of businesses as ideal. Moreover the lack of job opportunities leave them with few other options. And finally sometime larger families provide buyers with a cost effective labour advantage.
  • Immigration: Canada is one of the very few countries that is very open to immigration. One of the possible options for new immigrants is the purchase of a business that employs Canadian residents. This option is however underused since most immigrants use other options available. Moreover, immigrant coming to Canada are more entrepreneurial  by nature (otherwise they would not have risked everything they have to come to Canada). Very frequently, they choose to buy a business quickly after realizing that their future as employees might not be as bright as they expected.
  • Concentration of population: A large market is generally more liquid than a smaller one. The number of business owners desiring to sell and potential individuals and/or companies looking to buy increase the possibilities of matching buyers’ and sellers’ needs.  As a good analogy, finance professionals know that large capitalization (total company value in the stock market) companies  have more liquid stocks than small capitalization companies.

For all these reasons, it’s mach easier to sell a business that is located in Toronto than a business in a small town in North America. Furthermore, even business valuations are higher in Toronto. Liquidity increases price. A buyer will offer a higher price if he/ she knows that it will be easier to sell the business if it ends-up been not what they expected it to be.

Unfortunately, not all business sellers take advantage of  the Toronto advantage when they sell their businesses. If the business is not exposed to the market for a reasonable time with adequate advertising then it will not sell for the best possible price. unfortunately, business owners selling with no professional help end-up leaving a lot of value on the table.

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