1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
Act quickly: contact the recipient right away, request immediate deletion or return of the documents, and follow up in writing so there's a clear…
Read the full answer →These are usually answering two different questions, even though both produce a dollar figure. An accountant, particularly a Chartered Business…
Read the full answer →Yes, it's a real risk, particularly in a private, direct-from-owner distress sale rather than a court-approved receivership or bankruptcy process. If…
Read the full answer →The buyer's obligation to repay the acquisition loan does not disappear simply because the business underperforms after closing — a borrower generally…
Read the full answer →Yes — this is a common and legitimate way to protect a deal where a large part of the business's value is concentrated in one or a small number of…
Read the full answer →Yes, it's worth identifying these early, since personal guarantees and other debts tied to the business are one of the more overlooked issues in a…
Read the full answer →These "no forward-looking representation" or non-reliance clauses are common in purchase agreements and are generally enforceable, meaningfully…
Read the full answer →Yes, and it's a reasonable thing to ask before signing anything. Commission arrangements in business brokerage are negotiated between the parties —…
Read the full answer →Yes — how a business is marketed, including how broadly and how identifiably, is something you can and should negotiate with your broker rather than…
Read the full answer →Yes, this is sensible practice, especially before sharing anything that would identify your business or its finances. Confirming who you're actually…
Read the full answer →Yes, and it's a reasonable request when a buyer's financing means their lender will be reviewing your financial information as part of underwriting.…
Read the full answer →Yes, it's a reasonable and common request, and a broker with a genuine track record of satisfied clients should be comfortable providing at least a…
Read the full answer →Yes, and this is a reasonable request where you're buying shares of a parent or holding company and don't want to inherit an unrelated subsidiary's own…
Read the full answer →Yes, and this is a particularly useful request where the deal is structured as a share purchase, since simply excluding a contract from a schedule —…
Read the full answer →This is a common and important discovery to make before closing, not after. Businesses often assume everything they use day to day is owned by the…
Read the full answer →Generally only if your lease permits it, and many commercial leases don't address partial assignment at all, or restrict assignment to the whole leased…
Read the full answer →Sometimes, but this is exactly the kind of structuring move that many modern commercial leases are drafted to catch. Under the Business Corporations…
Read the full answer →It depends on what you actually found and whether it ties to something still open in the deal. If the new issue represents a real breach of the…
Read the full answer →It depends entirely on what your purchase agreement actually says, and this is where distressed purchases differ most from an ordinary business sale.…
Read the full answer →It depends on what the agreement allows, but changing your mind about selling isn't automatically a free pass out of a signed listing agreement. Many…
Read the full answer →Not automatically, but it's a reasonable question to probe rather than ignore. A listing can sit unsold for reasons that have nothing to do with the…
Read the full answer →In practice, usually yes, even though it is not a strict external legal requirement so much as a practical reality of how commercial lending works. A…
Read the full answer →Yes. A bank is not obligated to lend on any particular financing structure, and lenders routinely have views about how much seller financing they are…
Read the full answer →Yes, and this is a common lending condition rather than anything unusual. Where a bank's loan depends heavily on the acquired business continuing to be…
Read the full answer →It can, depending on what the loan agreement and general security agreement actually say about disposing of secured assets. A general security…
Read the full answer →Closing generally can't actually complete — meaning documents and possession aren't released — until the buyer's lawyer confirms the funds have…
Read the full answer →There is no legal default here — it depends entirely on how the basket provision is drafted, and most Ontario purchase agreements set the basket as a…
Read the full answer →It depends entirely on how the basket is drafted, because Ontario purchase agreements use both approaches and neither is a legal default. A "tipping"…
Read the full answer →It depends on how the purchase agreement defines the basket's scope, since there is no automatic rule exempting fundamental representation claims from…
Read the full answer →Not fundamentally, though the specific mix can differ from lender to lender. The Business Development Bank of Canada is a federal Crown corporation…
Read the full answer →In principle yes, and blending senior bank debt, a seller vendor take-back, and the buyer's own cash or equity is a normal, common way to fund a small…
Read the full answer →Possibly, and it comes down to the same sandbagging language discussed elsewhere in the agreement. Where a purchase agreement is silent, or expressly…
Read the full answer →An open college investigation doesn't automatically freeze your ability to sell a practice, but it complicates the sale considerably and can affect…
Read the full answer →Bonding and insurance are generally tied to the specific legal entity (and often the specific individuals) that hold them, not to the trades business…
Read the full answer →It depends on what the broker's contract with the brokerage actually says, and this is one of the most contested points in an insurance brokerage sale.…
Read the full answer →A bring-down certificate is a document the seller signs at closing confirming that the representations and warranties made in the purchase agreement…
Read the full answer →Yes, and bringing in a partner or investor is a genuine alternative to an outright sale, not just a stepping stone to one. Depending on the structure,…
Read the full answer →A business broker's marketing materials are generally based on figures the seller provided, and a broker typically isn't independently auditing those…
Read the full answer →If the business operates through a corporation, ownership legally follows the share registry, not "title" in the way it might for real property. If…
Read the full answer →This is generally something you assess directly rather than through a public compliance database, since accessibility compliance depends heavily on the…
Read the full answer →A filed class action (or a motion seeking certification of one) is generally a matter of public court record and can be found through a court records…
Read the full answer →If the corporation's shares are held by a family trust rather than by individuals directly, your actual seller is the trust, acting through its trustee…
Read the full answer →Undisclosed back taxes discovered after closing generally breach a seller representation about tax compliance and outstanding liabilities that most…
Read the full answer →Yes, at least for recalls that went through a formal public process. Health Canada maintains a public recall and safety alert database covering many…
Read the full answer →Burnout tells you how you feel about running the business today. Sellability is a separate question: whether the business can keep performing for…
Read the full answer →Yes, buying directly from an owner who hasn't yet gone into formal receivership or bankruptcy is legally possible and happens often, but it comes…
Read the full answer →Yes. A business can be sold while it's part-way through a formal proposal to its creditors under the federal Bankruptcy and Insolvency Act — a proposal…
Read the full answer →Not quite — a partnership isn't a corporation, so there are no shares to buy in the legal sense. Instead, "buying in" generally means being admitted as…
Read the full answer →Yes — this is a straightforward asset purchase limited to specific, tangible items, and it's one of the narrower versions of that structure. You and…
Read the full answer →Yes, and this is one of the real advantages of structuring the deal as an asset purchase rather than buying the whole corporation through a share sale.…
Read the full answer →If your shareholders' agreement includes a buy-sell provision triggered by death, often funded in whole or part by life insurance held for this…
Read the full answer →Yes, a gradual buyout is a common way to structure a partner exit, most often using a vendor take-back arrangement where the departing partner accepts…
Read the full answer →Yes, and this comes up naturally where a business already operates across more than one legal entity — for example, a group with an operating…
Read the full answer →Yes, staged purchases like this are a recognized approach, particularly where a buyer wants to start with partial ownership or a defined piece now,…
Read the full answer →Yes, this is a common and often deliberate structure. You can purchase the operating business — as shares or assets — while buying the real property…
Read the full answer →This can get complicated quickly, since municipal and provincial licensing regimes are often built around a single licensed use per premises or per…
Read the full answer →Generally, yes, if your purchase agreement is drafted to allow it — whether your buyer can walk away over onerous franchisor conditions depends…
Read the full answer →Usually, yes — but it depends on how your purchase agreement handles landlord consent as a closing condition, not on the lease itself. Purchase…
Read the full answer →Yes, and this is one of the most standard and sensible protections a buyer can ask for in a business purchase and sale involving leased premises. If…
Read the full answer →A failed credit check is generally treated as a legitimate basis for a franchisor to refuse or delay approving the transfer, since financial…
Read the full answer →It depends on whether the dispute is tied to you personally or to the tenancy itself, and on how the deal is structured. Where the buyer takes an…
Read the full answer →This depends heavily on how the transfer and the franchise agreement are structured, and on whether your buyer is entering an entirely new franchise…
Read the full answer →This depends on how your purchase agreement structures closing, but it's worth thinking about carefully rather than leaving it to chance, since…
Read the full answer →Possibly, though whether this happens depends entirely on the franchisor's own practices and what your specific franchise agreement's fee provision…
Read the full answer →Yes, this can happen, though it's a different path from a straightforward assignment of your existing lease. Instead of taking an assignment of your…
Read the full answer →Neither side unilaterally controls it — allocation is a negotiated term of the purchase agreement that both parties need to agree on, precisely because…
Read the full answer →Potentially, yes, and this is one of the more counterintuitive risks of not obtaining a full release when you originally sold. If you were never…
Read the full answer →It depends on how the purchase agreement defines the "Losses" that are indemnifiable, since this is not something Ontario law automatically grants…
Read the full answer →Yes, and most buyers' lawyers will insist on exactly this, because of the withholding obligations that apply when purchasing from a non-resident…
Read the full answer →Absent specific protections negotiated into the purchase agreement, a buyer who now legally owns the business generally has the right to run it as it…
Read the full answer →This kind of disagreement is common, and it often turns on how the purchase agreement itself defines materiality for the specific representation,…
Read the full answer →If the buyer signed a confidentiality agreement, sharing your information with someone outside its permitted scope — beyond the buyer's own defined…
Read the full answer →What's available depends heavily on how the vendor take-back was actually documented and secured at the time of the sale. At minimum, you generally…
Read the full answer →An OHIP billing number is tied to the individual physician who holds it, not to the practice, the clinic space, or the corporation operating it. A…
Read the full answer →Exclusivity clauses in a business-sale LOI are typically written to restrict the seller from shopping the business to other buyers — they don't usually…
Read the full answer →This generally isn't something your buyer can do while still holding your franchise — franchise agreements almost always require the franchisee to…
Read the full answer →This does happen, and it's a different kind of pressure than a landlord's — here, your own buyer is asking you to remain on the hook, usually because…
Read the full answer →Either outcome is possible, and it comes down entirely to what the landlord is willing to agree to — there's no default rule that a new guarantee…
Read the full answer →Generally, this depends on how the specific licensing body treats a corporate name change, but it's usually a lighter process than an ownership…
Read the full answer →Often, yes — but not always, and this is one of the most important traps in a business purchase and sale. In a share sale, the buyer acquires the…
Read the full answer →Buying shares of a parent corporation generally means you indirectly acquire everything that parent owns, including its subsidiaries, unless something…
Read the full answer →Yes. Buying shares means buying the corporation itself, and a corporation's history comes with it — including claims, disputes, or lawsuits that…
Read the full answer →Yes, meaningfully, though it changes the mechanics of your exposure rather than eliminating Canadian tax altogether. Using a Canadian holding company…
Read the full answer →The biggest difference is what you're relying on for protection. Buying from an owner directly, you can negotiate representations, warranties, and…
Read the full answer →Yes, and this is a genuinely common source of friction in deals involving buyer financing. A lender financing the purchase has its own separate…
Read the full answer →Yes, and whether that's a good idea depends entirely on which side of the deal you're on. Nothing prevents a purchase agreement from defining "seller's…
Read the full answer →A properly drafted non-solicitation agreement is meant to stop you from actively poaching the employer's customers if you later leave, reaching out to…
Read the full answer →Yes, and this is the single most common way an LOI or term sheet goes wrong. Courts look at the substance of what was actually written and how the…
Read the full answer →Potentially, yes, and this is one of the clearer examples of an asset purchase not giving a buyer the clean break they might expect. Ontario labour…
Read the full answer →It depends on what the applicable collective agreement actually says, since this isn't a general rule that applies the same way to every unionized…
Read the full answer →Yes — a purchase agreement can make the buyer's own internal corporate approval, such as approval by its board of directors or, where relevant, its own…
Read the full answer →Generally, this depends on whether you and the previous owner are, legally, the same employer for the purposes of the claim. In a share purchase, the…
Read the full answer →Yes, and this is one of the more significant risks buyers underestimate in an asset purchase specifically. Common-law reasonable notice, which can far…
Read the full answer →A broker acting for you owes you a duty of loyalty and is expected to follow your reasonable instructions about your own listing, but whether they're…
Read the full answer →It's possible in some circumstances, but it isn't something a broker can simply decide to do without addressing the obvious conflict of interest that…
Read the full answer →No — a broker acting for you as seller is generally expected to present every genuine offer to you, even one they personally think is too low, and let…
Read the full answer →No, not properly — marketing material a broker prepares for your business is expected to be accurate, based on real information about the business, not…
Read the full answer →No — a confidentiality agreement's obligations generally don't depend on whether a deal actually happens. An NDA is typically drafted to survive…
Read the full answer →Generally, yes, if the buyer can't point to an actual unsatisfied condition or an actual breach — a vague, unproven suspicion that something might be…
Read the full answer →Not just by labelling it that way — calling something "material" doesn't make it so, and a buyer trying to walk away from a deal has to actually…
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