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# What do you need to do before buying a business?
- URL: https://blog.sellingyourcanadianbusiness.com/what-do-you-need-to-do-before-buying-a-business/
- Published: 2021-01-18T13:23:41.000Z
- Updated: 2026-08-14T18:56:56.000Z
- Description: Seven steps that prepare a first-time Canadian buyer before purchasing a business, from due diligence and choosing capital partners to sizing the down payment.
- Author: Karl E. Sigerist, Jr., ICD.D
- Tags: Articles Buy-Side, #review-paused-too-similar, #review-excerpt-missing-2026-08-14

What do you need to do before buying a business in Canada?

For an aspiring business owner in Canada, purchasing an existing company is a significant milestone. Before you proceed, several essential steps ensure a smooth transaction and a successful transition — whether you are buying a small local business or a larger enterprise, thorough preparation is key. Seven steps set you up for success.

1\. Perform due diligence — examine the business's financial health, legal standing and market outlook with accountants, lawyers and appraisers; understand cash flows, liabilities and assets, and build a realistic rather than overly optimistic forecast, factoring in provincial market conditions and tax rules

2\. Choose your capital partners wisely — align investors and lenders with your values, vision and long-term goals, and clarify how active a role each wants (board seat, decision influence)

3\. Be prepared with answers for capital partners — why the current owner is selling, whether you have a third-party valuation, the company's financial health versus competitors, share versus asset purchase, and what is included (tangible assets versus goodwill)

4\. Identify your capital needs — a down payment of typically 20% to 40% signals commitment and "skin in the game"; fund the balance through senior debt, mezzanine financing, a vendor takeback or earnouts

5\. Have a contingency plan — prepare for lost key employees, customer or supply-chain disruption and market shifts with a financial cushion, operational flexibility and a strong management team

6\. Surround yourself with experts — beyond accountants and lawyers, consult industry specialists, financial advisors and operational consultants, especially those with Canadian market knowledge

7\. Understand the opportunity cost — acquisitions typically take 24 to 36 months and many searchers never close (per Stanford Graduate School of Business research); outsourcing the search to advisors with local knowledge saves time and improves your odds

Key facts: before buying a business in Canada

Seven steps: due diligence, capital partners, ready answers, capital needs, contingency plan, expert team, opportunity cost  
Down payment typically 20% to 40%; fund the balance via senior debt, mezzanine, vendor takeback or earnouts  
Build realistic forecasts — overly optimistic projections create later financial strain  
Acquisitions take about 24 to 36 months; advisors with local knowledge improve success

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Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Consult qualified advisors regarding your specific circumstances.