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Selling my notary practice

A thoughtful process
After many years of work, you are now at the stage of selling your notary practice.This process requires good preparation and careful consideration, which should start long before you retire.

When to sell?
First, you have to decide when you want to sell. At age 60 or 65? One year from now, or two, or perhaps three? Or further down the road? This decision is key in terms of planning this major transaction.

Tax consequences
Selling your notary practice will have tax consequences. You will have to declare any capital gain realized at the time of sale. Depending on the situation, your financial advisor may, for example, recommend different measures to defer a part of the gain or to obtain a deduction in case of a loss.

The right questions

Your professional reality
Have you found someone to take over your practice? Are you considering a gradual retirement? Are you a partner or a sole proprietor? Do you have several employees? Do you lease your office or do you own the building housing your practice? Are you selling to a family member? The answers to these questions will help determine the objectives of the sale and how you go about it.

Seller’s considerations
As a seller, you must consider other factors and be realistic.

  • Timeframe: It can take several months for a transaction to be finalized.
  • The price: You must determine the real market value of your practice to establish a fair selling price.
  • Market conditions: Market trends in your area and the size of your practice are factors to consider.
  • A win-win transaction: A satisfactory transaction for both parties involves finding the right buyer with whom effective negotiations can be conducted.

Set feasible goals!

Preparing the sale of your practice

Leave nothing to chance! Surround yourself with a team of professionals who understand your needs and who have the requisite expertise. You will require the services of:

  • accountants
  • financial planners
  • lawyers, notary
  • appraisers (specialized firms)

You will have to inform the potential buyer about:

  • the condition of the equipment
  • notarial records, client files and other documents
  • the staff and other parties involved (compliance with labour standards)
  • accounting records
  • contracts: lease, suppliers, association, etc.

Assess the fair market value
This step is very important. Use an appraiser to help you determine the selling price of your practice. Assets to appraise include:

Tangible assetsIntangible assets
·      Specialized equipment

·      Furniture, supplies, etc.

·      Office equipment (software, computers, office and              reception furniture, etc.)

·      Leasehold improvements

·      Safe

·      Goodwill

·      Number of clients

·      Notarial records

·      Organizational system

Types of valuations

While some calculations are simple, appraising intangible assets is more complex. Experts use different methods to accurately assess the value of these types of assets. In all cases, the objective is to measure the real capacity to generate an operating profit or an attractive return.

Valuation methods
The methods vary according to the situation and needs:

  • Excess profits : To identify the cash flows net of tax that can be generated
  • Royalties: To determine the expected after-tax income generated using a royalty rate typical for the sector.
  • Cost : To determine the size of a reasonable return on invested capital, after assessing the asset development costs..

At the end of the day, you will have to determine whether the valuation truly reflects reality and whether the negotiation objectives have been clearly identified.

Sale

Sale of shares or sale of assets?

What are the conditions of sale? With or without a service contract? This must be taken into account when setting the selling price, as must tax considerations, depending on the type of transaction. According to your status (incorporated or not), the price allocation can have major consequences, as can the terms of the transaction.

If the buyer is a member of your family, special tax measures apply, since it is a transaction between related persons. For example, you could lose certain benefits such as the capital gains deduction.

A thorough analysis is a must. A financial advisor can help you make sense of it all.

Your obligations as the seller

If you reach an agreement with the buyer, you will have to:

  • Provide all necessary information to the buyer.
  • Negotiate with the lessor if your office space is leased.
  • Repay or transfer loans and/or the lease.
  • Satisfy the other conditions of sale.

 

Sold!

You have in hand all the buyer’s documents, and all the conditions of sale have been met. Now you have to organize and plan the transition. This involves a number of steps.

Final steps
Among the key tasks, you will have to:

  • Prepare a complete inventory of supplies, equipment, etc.
  • Draw up a complete client list.
  • Organize the accounting.
  • Accept the final projects of all contracts.
  • Give notices and/or records of employment and T4 slips to your employees.
  • Pay salaries and vacation pay.

Closing and cancellations
Several agencies and organizations will have to be informed of the end of your activities. You will have to:

  • Assign the notarial records
  • Close the trust accounts
  • Close all your accounts: CSST, GST/QST.
  • Inform the Registraire des entreprises du Québec (REQ).
  • Cancel your liability insurance.
  • Cancel licences for any terminals, payment system and other software

You must also be sure to notify the Chambre des notaires du Québec of the transaction and comply with the Notarial Act and the Notaries Act (Chapter N-3) and their regulations.

Be informed

Make things easier for yourself
When selling your notary practice, you must leave nothing to chance. It is a rigorous and demanding task for one person to handle. The Financial gives you access to all the resources you need to help you make the right choices.

Professionals you can trust
For more detailed answers and an in-depth analysis of your situation, place your trust in one of our advisors.

For an analysis of your situation,
get in touch with one of our advisors