Business Brokerage Regulations in Ontario, Canada



In Ontario and some other provinces in Canada, business brokers need to have a Real Estate licence and be affiliated with a registered Real Estate company in order to practice business brokerage. Business buyers and sellers have to verify that the business broker they are considering hiring is a licensed real estate sales representative or broker for the following reasons:

Real Estate companies in Ontario have to operate a Real Estate Trust Account with a Canadian bank. All monies received by real estate companies as deposit for real estate or business transactions should be deposited in the trust account. Money in this trust account is protected from creditors so that deposit owners get their deposit back even if the real estate company defaults.

Real Estate companies, Brokers and salespeople are bound by the Real Estate and Business Brokers Act that protects consumers with an elaborate code of ethics and strict regulations.

Practicing Business Brokerage without a real estate licence is illegal. Non licensed brokers are at the mercy of regulators and could be ordered by authorities to stop their activities at any time. All money, time and efforts business buyers and sellers have invested with such brokers could be lost.

Real estate registered professionals are required to have in their possession their registration cards. Clients are in their right to require to inspect this card at any time before signing any buyer or seller representation agreement. This is an easy task that all customers should do.

Competent business brokers offer tremendous value to buyers and sellers.

From a seller's perspective:

They help protect confidentiality: before divulging any specific information about the company; They will first qualify buyers and have them sign a confidentiality agreement. Only qualified buyers will know the name of the company and other relevant information.

They save a lot of sellers' time and efforts by interviewing potential buyers and only retaining the most serious ones.

They help sellers with all the specific business transfer skills such as negotiating and writing letters of intents, advising sellers on the best strategies etc.

Finally, they take care of all the marketing activities necessary to generate a high volume of leads to select from.

From a buyer's perspective:

The presence of a business broker insures that the seller is serious about selling his/her company and is realistic about the price because he/she has received professional advice about the sale process.

Buyers have a professional intermediaries who will do their best to make the deal happen and will solve any emotional frictions that might derail the deal.

Brokers can also analyze buyers' personalities and an past experiences to advise whether the businesses are the right fit for them.

These are only a few examples of how business brokers bring value to business deals for the benefit of both business buyers and sellers.