When Should I Start Planning to Sell My Business?

Most business owners start planning their exit too late. By the time they call a lawyer, some of the most valuable opportunities to maximize the transaction have already passed. The honest answer to when you should start planning is earlier than you think; much earlier. If you want to maximize your tax advantages, we are talking two years plus. If you want your business to be sale ready and maximize your sale price, we're talking three to five years before you want to sell.

Why Two Years for Tax?

On the tax side, the Lifetime Capital Gains Exemption (LCGE) allows eligible Canadian individuals to shelter a significant amount of capital gains from the sale of qualifying small business shares. The LCGE allows you to shelter $1.25M (as of 2026) of capital gains per shareholder. To take full advantage of it, the right corporate structure needs to have been in place for at least two years before the sale. If you call us six months before closing, we can still help; we just can't get those two years back for you.

Why Three to Five Years?

On the business value side, buyers pay premium multiples for businesses that are profitable, growing, well-organized, and not dependent on the owner to operate. Getting there takes time. A business that generates $2M in EBITDA but collapses without its founder at the helm will trade at a significant discount to a business of the same size that runs without him. A business with only a few key customers has an issue known as “concentration risk”, meaning that the loss of a key customer can sink the business. Businesses with repeatable and predictable services lines (e.g. subscription models or annually required services) are often valued higher. Sometimes framing the business a certain way increases the amount a buyer is willing to pay, but often it takes years of planning and deliberate changes to prepare the business for sale.

What Happens If You Wait Too Long?

The most common scenario we see is a business owner who receives an unsolicited offer and calls us for the first time with a buyer already at the table. That is not the worst position to be in; deals absolutely get done from that starting point. But it is a constrained position, and almost certainly does not maximize value to the seller. The tax planning options are limited, the corporate structure may not be optimized, and the seller is negotiating reactively rather than from a position of preparation.

The second most common scenario is a business owner who decides to sell and then discovers during the buyer's due diligence process that their records, contracts, and corporate structure are not sale-ready. Deals get delayed, renegotiated, and sometimes killed by problems that could have been resolved years earlier with minimal cost and effort.

What Does Early Planning Actually Look Like?

Early exit planning is not a full-time project. It is a series of conversations and decisions made well in advance of a transaction. At Outsiders Law, early planning typically involves:

1.      A review of your corporate structure to identify whether it is optimized for a sale, including whether a family trust or holding company structure makes sense for your situation.

2.      LCGE planning maximized; confirming that your shares qualify and that the two-year clock is running on the right structure.

3.      A review of your key contracts, employment arrangements, and any existing liabilities that a buyer's due diligence process would flag.

4.      An honest conversation about what your business looks like to a buyer and what needs to change before you go to market.

None of that requires a buyer. All of it makes a material difference to the outcome when one appears.

The Best Time to Call Us Is Now

If you are thinking about selling your business in the next three to five years, the conversation with your M&A lawyer should be happening today. Not when you have a buyer. Not when you've decided to sell. Even if you aren’t thinking of selling your business right away, you should consider whether your structure is optimized for today, and ready for any unexpected sale event.

The business owners who get the best outcomes are the ones who treated their exit as a process, not an event.

Outsiders Law works with Alberta business owners years before a transaction, not just at the closing table. If you are thinking about selling your business someday, the best time to talk to us is now.

For more on the M&A process, visit our Mergers & Acquisitions page or our Selling Your Business in Alberta page.

This article is for general informational purposes only and does not constitute legal advice. It does not create a solicitor-client relationship and should not be relied upon as a substitute for advice tailored to your specific transaction or circumstances. If you're navigating the complexities of M&A, remember that the details matter. For expert guidance, feel free to contact Outsiders Law.