1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
Only if the buyer and seller specifically negotiate and document that feature — a standard vendor take-back note is simply a debt instrument with…
Read the full answer →It depends entirely on what the buyer and seller actually negotiate and document, since a vendor take-back note is not automatically secured against…
Read the full answer →Possibly, but waiting carries real risk. Both the negotiated survival period for an indemnity claim and Ontario's general limitation law generally run…
Read the full answer →It is more common, and generally cleaner, for the buyer to carve a specific known issue out of the general cap rather than to describe it as "waiving"…
Read the full answer →Generally, yes, on the underlying deal itself. Since price and other core terms in a typical LOI are non-binding, you don't usually need a specific…
Read the full answer →Responsibility for warranty claims on pre-sale work depends on what the purchase agreement says, layered on top of what the deal structure implies by…
Read the full answer →Warranty claims on products the seller sold before its bankruptcy generally become claims against the bankrupt estate, like any other unsecured…
Read the full answer →It's worth asking why, though there can be legitimate limits on what a broker can share. Details of other sellers' transactions are often confidential,…
Read the full answer →Possibly, though the outcome varies significantly by lender rather than following one fixed answer. Commercial lenders assessing a business acquisition…
Read the full answer →Yes, and this is a surprisingly common gap. Websites and social media accounts are frequently registered in the name of a founder, an outside marketing…
Read the full answer →This depends on how the exclusivity clause was actually drafted, since most exclusivity provisions restrict the seller from shopping the business…
Read the full answer →A final walkthrough is essentially a last check that what was represented in the purchase agreement still matches reality on the day the deal is…
Read the full answer →A drop in revenue is only one possible trigger, and a well-drafted material adverse change clause is written to capture a broader range of serious harm…
Read the full answer →"Cleaning up" generally means getting the business into the state a buyer's due diligence will expect to find it in, which covers a fairly specific…
Read the full answer →In a straight sale, you generally receive cash (or sometimes a mix of cash and other consideration) and walk away with a defined, completed…
Read the full answer →It's a deliberate limit on how far a representation goes. Instead of promising something is absolutely true, the seller is only promising it's true as…
Read the full answer →Nothing legally forces it, in most cases. Because the core terms of an LOI are typically non-binding, neither party is usually obligated to actually…
Read the full answer →It depends on how central that consent is and what the agreement says happens if it doesn't come through. Many purchase agreements identify specific…
Read the full answer →If the buyer signed a confidentiality agreement, a leak that the business is for sale is generally a breach, and you have contractual remedies — most…
Read the full answer →What happens is generally whatever the agreement's outside date provision specifically says, which is exactly why this clause deserves careful…
Read the full answer →Your listing agreement is typically with the brokerage firm, not solely with the individual broker you've been dealing with, so the firm generally…
Read the full answer →What happens depends on when the inaccuracy is discovered and what the purchase agreement's indemnity provisions say. If it's caught before closing, it…
Read the full answer →This turns on whether the deposit was made conditional on due diligence in the first place — a common way to structure deposits precisely because…
Read the full answer →It depends on why the condition became impossible and what the agreement says about that scenario. If a condition simply can't be met through no fault…
Read the full answer →It depends on whether the agreement's original closing date is treated as a hard deadline or simply a target, and on whether an "outside date"…
Read the full answer →In practice, most non-binding negotiations end exactly this way — quietly, without either side formally terminating anything, once neither party is…
Read the full answer →A broker who brings you an offer isn't guaranteeing the buyer can actually close — vetting a buyer's financing and seriousness is part of a broker's…
Read the full answer →Start by asking directly, and asking why the answer isn't forthcoming if it isn't. There can be legitimate reasons for some discretion — protecting a…
Read the full answer →Pressure to sign quickly is a reason to slow down, not a reason to comply faster. Nothing legally requires you to sign an LOI on a buyer's preferred…
Read the full answer →Generally, they're allowed to, at least legally — since price and structure in a typical LOI are non-binding, either side can propose changes after…
Read the full answer →Unless your LOI specifically ties the exclusivity obligation to the buyer maintaining their financing, the seller's restriction against talking to…
Read the full answer →If your LOI includes an exclusivity or no-shop clause, a better offer arriving the next day doesn't change your obligations under it — you're generally…
Read the full answer →This is workable, but how it's structured depends on how the seller's divisions are actually organized legally. If each division already operates as…
Read the full answer →What happens depends on what the information actually reveals and how the agreement handles the gap between signing and closing. Most purchase…
Read the full answer →This is one of the more common flashpoints right around a scheduled closing date, and how it gets resolved depends on what the agreement says about…
Read the full answer →This comes up more often than buyers expect — a piece of equipment used across the whole operation, a single contract or licence covering everything…
Read the full answer →This is exactly the kind of gap that turns a straightforward transaction into an expensive argument, because when the agreement doesn't say what…
Read the full answer →Buyers most often walk away not because of the headline number itself, but because they can't reconcile that number with what their own due diligence…
Read the full answer →A confidentiality agreement worth relying on needs several specific pieces, not just a general promise to "keep things confidential." It should clearly…
Read the full answer →The first practical step is usually an honest, private assessment of where the business actually stands — not talking to a buyer or broker yet, but…
Read the full answer →Before signing a listing agreement, ask how long the term runs, whether it's exclusive, what happens if you find your own buyer, and whether any "tail"…
Read the full answer →Start with a clear, written request for an update, and give a reasonable but specific deadline for a response, rather than letting silence continue…
Read the full answer →Most sellers release information in stages, saving the most sensitive material for buyers who've shown genuine commitment. Early on, after a signed…
Read the full answer →Ask for specifics rather than accepting a general description of "we'll find you a buyer." A concrete plan should cover where and how the business will…
Read the full answer →The label on the document — "letter of intent," "term sheet," "statement of intentions" — doesn't determine what's actually binding; the specific…
Read the full answer →The schedules are where the specifics live — the main body of a purchase agreement states the general promises, and the schedules attach the actual…
Read the full answer →A closing binder is the organized, permanent record of everything signed and exchanged to actually complete the transaction. Expect the executed…
Read the full answer →This is normally done jointly, with the buyer (or their representative) and the seller physically walking through and counting together, sometimes with…
Read the full answer →Neither party unilaterally decides this on the day itself — the purchase agreement is supposed to define the methodology, the target figure, and the…
Read the full answer →The buyer's purchase funds normally sit in the buyer's own lawyer's trust account well before the scheduled closing date, precisely so they're ready to…
Read the full answer →This is one of the biggest hidden risks in buying a software company, because the default rule for contractors is essentially the opposite of the…
Read the full answer →This is one of the most important things to nail down before buying a software company, because ownership of the code isn't automatic just because the…
Read the full answer →An unregistered trademark can still exist and still have an owner — trademark rights in Canada can arise from actual use in the marketplace, not only…
Read the full answer →This is handled through the statement of adjustments, the calculation lawyers prepare to apportion shared costs as of the closing date. Utility…
Read the full answer →Because an indemnity exposure tied to the full purchase price, or worse, left uncapped, would leave a seller financially at risk indefinitely for…
Read the full answer →A special, or specific, indemnity exists because relying only on a breach of a general representation can leave real gaps for a known, identified risk.…
Read the full answer →This turns on how concrete the promise actually was, much the same way a promised promotion does. A raise that was a genuine, finalized commitment —…
Read the full answer →Your job protection while on disability leave carries forward the same way other protected leaves do — Ontario's Employment Standards Act, 2000 treats…
Read the full answer →Not automatically, but a new owner does have some real ability to restructure how and where the business operates. Your existing job, including its…
Read the full answer →Generally, yes — your entitlement to public holiday pay doesn't depend on which company happens to be signing your paycheque on any given date, it…
Read the full answer →Not automatically, but it depends on exactly how the sale is structured. If the new owner is buying the shares of your employer, your employer hasn't…
Read the full answer →It depends on what kind of perk it is and how it's documented, since not every workplace benefit is treated the same way legally. Some perks, like a…
Read the full answer →What happens to your pension depends heavily on the type of plan and exactly how the sale is structured, and it's genuinely one of the more technical…
Read the full answer →It's a real possibility, and it's one of the more practical things worth confirming directly rather than assuming will sort itself out. Your continuous…
Read the full answer →Not automatically, though how they're actually handled going forward can genuinely depend on what stage they were at and how they were documented. A…
Read the full answer →No, not legitimately, if you're genuinely continuing in the same role through a sale. A probationary period exists to let an employer assess a new…
Read the full answer →If your employment is treated as continuing through the sale — the usual outcome when a new owner takes over an operating business and keeps its staff…
Read the full answer →Not automatically, but stock options are a different animal from your ESA-protected employment entitlements, so they need their own careful look.…
Read the full answer →If you're in a unionized workplace, the general answer is that your union membership and the collective agreement covering you don't simply evaporate…
Read the full answer →In most cases, yes, and there's no good reason a new owner should treat a previously approved day off differently just because ownership changed hands…
Read the full answer →This depends heavily on how firm that promise actually was, and a new owner isn't automatically bound by every conversation the old ownership had with…
Read the full answer →If you're continuing in your existing job through the sale, there generally isn't a fresh "reference check" the way there would be for an outside job…
Read the full answer →Yes. Being on a protected leave when your employer's business is sold doesn't put your job at extra risk, and it doesn't reset your entitlements…
Read the full answer →Not automatically, unless the purchase agreement and the vendor take-back note specifically give the buyer that right. A promissory note is often…
Read the full answer →When you buy shares or certain other taxable Canadian property from a non-resident seller, the Income Tax Act puts real responsibility on you as the…
Read the full answer →There's no automatic legal consequence to you simply because word gets out ahead of schedule, but it's worth quickly figuring out where the leak likely…
Read the full answer →Working capital adjustments run in both directions, so this is a normal and expected outcome, not a sign that something has gone wrong. If the final…
Read the full answer →Yes, and this is one of the more common sources of working capital disputes in practice. If the purchase agreement does not clearly pin down a single,…
Read the full answer →A wrong working-capital number is usually handled first through the purchase agreement's own adjustment mechanism rather than as an ordinary indemnity…
Read the full answer →Yes, and for a genuinely seasonal business it often should be, since a working capital target is meant to reflect the level of working capital the…
Read the full answer →Not automatically — plenty of small and mid-sized Ontario businesses have never had audited or externally reviewed financial statements, and that alone…
Read the full answer →Yes, this is worth pressing on rather than accepting a vague answer. Margins can genuinely decline for benign reasons — a one-time cost increase, a…
Read the full answer →Yes, this is worth digging into rather than treating as a minor administrative detail. A consistent pattern of late payments to suppliers, visible in…
Read the full answer →It's a reasonable thing to think about in advance rather than discover after the fact, particularly if the buyer is backed by outside financing or a…
Read the full answer →Yes, if the business operates from that property under a lease you're taking over, or if contamination there could affect the business you're actually…
Read the full answer →Generally yes, worth checking, even for issues that seem unrelated to why you're buying. Many Ontario businesses operate under sector-specific licences…
Read the full answer →It depends heavily on how the purchase happened. Buying specific assets through a court-approved sale with a vesting order is specifically meant to cut…
Read the full answer →Yes, a trades business's WSIB history deserves real attention during due diligence, because how you buy the business determines how much of that…
Read the full answer →Yes — vague language is the single most common way an LOI causes real problems later, more so than any specific clause being unfair. Ambiguity about…
Read the full answer →Yes, a genuine mismatch between bank deposits and reported revenue is one of the more serious financial red flags in a business sale, and it deserves a…
Read the full answer →Not automatically, but it's worth asking why. A longer listing term isn't inherently unreasonable — some brokers genuinely need more time to properly…
Read the full answer →It's worth investigating rather than automatically worrying. Low early activity can come from several different causes, and they call for different…
Read the full answer →Yes, this is worth taking seriously. A corporation's minute book — articles of incorporation, share registers, director and officer records,…
Read the full answer →It's worth a closer look, though there can be innocent explanations — some accountants are simply cautious about client confidentiality without a…
Read the full answer →It can be, and many buyers do this deliberately rather than waiting for a business they're interested in to eventually appear on a public listing. A…
Read the full answer →It can be, and pausing is usually more available to you than owners expect, especially before a definitive purchase agreement is signed. Most sale…
Read the full answer →Often, yes, particularly if the business is complex, if you and a co-owner disagree on value, or if a single number seems out of step with your own…
Read the full answer →In a straightforward asset purchase, unassumed debts, including WSIB premiums or tax debts, generally stay with the selling, insolvent entity rather…
Read the full answer →This is a common and important issue in a business sale, since a use that was properly zoned or licensed when you started can become a "legal…
Read the full answer →This is a serious issue to uncover before, rather than after, a sale, since zoning is a municipal bylaw matter separate from your lease or your…
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