1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
Generally not, unless your LOI specifically includes an interim covenant restricting how you run the business while the deal is pending — a common…
Read the full answer →Yes — buyers routinely price in risks that haven't materialized, because valuation is inherently forward-looking, and a buyer is paying for what they…
Read the full answer →Not in a strict legal sense — you're not obligated to answer every question a buyer asks, and you can decline to negotiate at all. But practically, a…
Read the full answer →Yes — in an asset purchase, this is one of the most routine points of negotiation, not an exception. The purchase agreement typically includes a…
Read the full answer →Yes, and for some deals this isn't just a negotiating preference but a practical necessity. A buyer can make obtaining a specific regulatory approval,…
Read the full answer →Yes, and in fact many buyers prefer this — requiring the seller to deliver updated schedules as close to the actual closing date as practical reduces…
Read the full answer →No, not without consequence. Once a purchase agreement is signed, a buyer is generally legally bound to close if the actual closing conditions are…
Read the full answer →Yes — where real property or environmentally sensitive operations are part of what's being purchased, making a satisfactory environmental report a…
Read the full answer →It depends entirely on what the purchase agreement says about it — this exact scenario is what "sandbagging" clauses are written to address, and…
Read the full answer →Generally, no — once an exclusivity clause's own stated period has run out, the seller's obligation under it typically ends with it. An expired…
Read the full answer →Yes, this is exactly what due diligence is designed to do — a buyer's accountants and lawyers will comb through your financial statements looking for…
Read the full answer →It depends heavily on exactly what the NDA says, and this is one of the most important drafting details to get right. An NDA that only prohibits…
Read the full answer →Generally, yes — a closing condition that exists purely for the buyer's benefit can usually be waived by the buyer alone, letting the deal close even…
Read the full answer →Usually, yes — exclusivity clauses are typically one-directional, restricting the seller from talking to other buyers, without placing a matching…
Read the full answer →Only if the agreement actually gives the buyer that right — there's no automatic legal escape hatch simply because business conditions worsen between…
Read the full answer →Yes, and this happens more often than sellers expect, precisely because a buyer's decision depends on their confidence in your numbers, not just the…
Read the full answer →Yes — there's no legal requirement for a buyer to have a business reason to walk away from a negotiation, and personal fit genuinely matters to many…
Read the full answer →It depends on how the confidentiality agreement you have with the buyer is written. A well-drafted NDA typically extends its restrictions to the…
Read the full answer →Yes, and in most purchase agreements they do. Conditions are generally organized by whose benefit they protect: the buyer typically has its own list —…
Read the full answer →It can, and it's one of the most common reasons a planned, gradual exit turns into a compressed one. If your health limits your ability to run the…
Read the full answer →Yes, and this is one of the most common and understandable ways sellers end up with an asking price the market won't support. A business you built…
Read the full answer →Yes — grief or a family emergency is a legitimate reason to move faster than you'd otherwise plan, and buyers and their advisors generally understand…
Read the full answer →Yes, and it's standard, sensible practice before you share sensitive financial information or spend real time with a prospective buyer. There's no…
Read the full answer →Yes, offering a transition period where you train and support the new owner is a genuine value-add that can support a higher price, since it directly…
Read the full answer →No, generally not, and this is a common misconception worth correcting directly. Ontario labour relations law's successor-rights protections look at…
Read the full answer →It's possible in some circumstances, though this is a fact-specific finding rather than an automatic consequence of buying part of a business. Ontario…
Read the full answer →Yes. Being a successor employer under the Employment Standards Act's continuity-of-employment rule doesn't depend on your history as an employer — it…
Read the full answer →Simply asking a price, however high, is not something a buyer can sue you over — setting your own asking price is entirely your call, and there's no…
Read the full answer →Generally, yes — in an asset purchase, you're a new employer, and there's no statutory obligation under the Employment Standards Act requiring you to…
Read the full answer →It depends on what the listing agreement actually allows, not simply on your own decision to move on. Some agreements include a termination clause…
Read the full answer →Yes, generally, as long as the messy history can be explained clearly and doesn't point to an unresolved problem still affecting the business today. A…
Read the full answer →Yes, and doing so is good, standard practice rather than an unusual demand. Requiring that any required third-party consent — a landlord's consent to a…
Read the full answer →You can say it, but insisting on it without being willing or able to substantiate it tends to backfire more often than it works, especially with an…
Read the full answer →You can insist on proposing it, but you can't force the seller to agree — like most terms in a purchase agreement, whether a pro-sandbagging clause…
Read the full answer →It depends entirely on whether your existing listing agreement is exclusive. Many business-sale listing agreements grant the broker sole rights to…
Read the full answer →Yes — a financing condition is a common, negotiable term in a purchase agreement, not something that happens automatically just because a buyer needs a…
Read the full answer →You can start your thinking there, but pricing the business purely around your personal retirement number, rather than what the business itself can…
Read the full answer →Not directly — the effort and sacrifice it took to build the business, while genuinely significant to you, isn't something a buyer is paying for, since…
Read the full answer →Yes — if you haven't signed anything, you're generally free to pull out at any point, regardless of how far the conversations or preliminary due…
Read the full answer →Yes, you're always free to hold your price — there's no legal obligation to lower it just because buyers say so, and you can simply decline to sell…
Read the full answer →Yes, a fixed, non-negotiable price is a legitimate strategy, and some sellers do genuinely hold out for a specific buyer willing to meet their number…
Read the full answer →Yes. You are entitled to take the time you reasonably need to understand what you're actually being asked to agree to before you sign anything, and…
Read the full answer →Yes — where the business purchase includes real property, or where title to key assets more broadly needs confirming, making your own lawyer's…
Read the full answer →Yes, and asking for this is entirely reasonable — you're entitled to understand exactly what you're being asked to agree to before you sign anything,…
Read the full answer →Yes — as the owner of the shares or assets you inherited, you generally have the same right to sell as anyone else who owns the business, whether or…
Read the full answer →Yes, but owner dependency is one of the biggest things that shapes both your price and how a deal gets structured. If the business genuinely can't…
Read the full answer →Yes, there's generally nothing preventing you from approaching different types of buyers differently, and it's actually common, since different buyers…
Read the full answer →It depends entirely on whether the LOI you signed contains an exclusivity or "no-shop" clause, since that's a separate question from whether the rest…
Read the full answer →You can use an industry rule of thumb as a rough starting point for your own thinking, but relying on one to actually set your asking price is…
Read the full answer →Legally, generally yes, as long as you haven't put that figure into a signed agreement or a document, such as a letter of intent, that specifically…
Read the full answer →Not without your agreement, at least not right away. If your employment simply continues with the same corporate employer, typical of a share sale,…
Read the full answer →In most cases, yes — a new owner generally can ask existing staff to complete a criminal record check as part of settling into how it runs the…
Read the full answer →To a real degree, yes — scheduling is an area where employers generally have meaningful discretion, and a new owner reorganizing how a business runs is…
Read the full answer →In principle, some adjustment to hours is within a new owner's normal discretion to run the business its own way, but there are real limits, and a…
Read the full answer →Generally, yes, at least to a meaningful degree, and you don't have a veto over it. When a new owner takes over a business and continues employing its…
Read the full answer →Generally, no. Since October 25, 2021, Ontario's Employment Standards Act, 2000 has made non-compete agreements with employees unenforceable in almost…
Read the full answer →Generally, a new owner can ask for a medical exam only where it's genuinely connected to a legitimate purpose, such as confirming you can safely…
Read the full answer →A new owner generally steps into the same position the old employer was in when it comes to workplace property like lockers, desks, or storage the…
Read the full answer →Generally, yes, in the same way they can generally access the rest of your personnel file — performance reviews are typically treated as part of the…
Read the full answer →No. Up until the moment the sale actually closes, you are still employed by, and owed wages by, the seller, and the seller can't simply stop paying you…
Read the full answer →Yes, there's nothing legally preventing a buyer from approaching a business owner directly, whether or not the business is listed for sale anywhere.…
Read the full answer →Generally, yes, in principle — a party usually can't rely on a condition's failure to escape its own closing obligation if that party's own conduct is…
Read the full answer →Not "forced" in a legal sense before any agreement exists, but it's entirely normal to make a pre-closing carve-out a condition of the deal itself. If…
Read the full answer →In a practical sense, yes, though it doesn't usually work as a single blanket demand — a seller's overall disclosure obligation in a purchase agreement…
Read the full answer →Generally not for the sale itself, if the term sheet's core terms were drafted to be non-binding, which is the normal approach for a business purchase…
Read the full answer →It depends entirely on how broadly the exclusivity or no-shop clause was drafted, since "entertaining" an offer and "accepting" one aren't always…
Read the full answer →This depends entirely on whether your LOI actually ties specific consequences to specific milestones, since milestones written into a non-binding…
Read the full answer →Yes, this is a common seller preference, often for ongoing rental income or estate planning reasons. If the real estate currently sits inside the…
Read the full answer →Yes — a seller can propose an anti-sandbagging clause just as readily as a buyer can propose the opposite, and whether it ends up in the final…
Read the full answer →Yes — nothing prevents a seller from making a deposit a condition of granting exclusivity, and some sellers use exactly this as a way to test how…
Read the full answer →Yes — a seller is entitled to ask for this, and doing so before investing significant time in negotiating a full purchase agreement is common, sensible…
Read the full answer →Not exactly "force," but in a share purchase there's no mechanism to cherry-pick which liabilities come along the way there is in an asset purchase.…
Read the full answer →Yes, a seller can take exactly that position, and there are practical reasons they might. Selling the whole company to a single buyer avoids the seller…
Read the full answer →Yes — a seller has no legal obligation to reorganize their business to match what a particular buyer wants to buy. A carve-out is a negotiated term,…
Read the full answer →Generally, no — if a closing condition exists purely for the buyer's benefit, the seller usually can't refuse to close by pointing to that condition…
Read the full answer →Not without real risk. If a seller knows a schedule is inaccurate and refuses to correct it before closing, that generally isn't a neutral choice —…
Read the full answer →Yes, to a degree, though this usually works better as a negotiated covenant than as a strict, enforceable guarantee, since a buyer generally won't…
Read the full answer →Yes, this is a recognized way for a seller to prepare for a partial sale — reorganizing a single corporation's business into two separate entities…
Read the full answer →Not unilaterally, in the sense of having free rein — whether and how a seller can update the schedules before closing is governed entirely by what the…
Read the full answer →The main protection is a properly drafted confidentiality agreement, signed before you share the customer list at all, that does two separate things:…
Read the full answer →Not in the sense of making you liable, as employer, for conduct or decisions that genuinely happened before you had any connection to the business —…
Read the full answer →They can ask, but you're not required to simply accept a lower position just because it's what's being offered, and being asked to "reapply" for a…
Read the full answer →Not without real consequences to the employer, even though a new owner does have some legitimate room to restructure. If your employment continues…
Read the full answer →Unfortunately, yes, unless the retention agreement itself says otherwise — a retention bonus and job security are two separate promises, and one…
Read the full answer →A new owner can certainly ask you to sign one, and unlike a non-compete, a straightforward confidentiality or non-disclosure agreement isn't banned by…
Read the full answer →Yes, and this surprises a lot of sellers who assume higher numbers are always a straightforward advantage. Margins significantly above what's typical…
Read the full answer →As a Canadian resident, you're still taxed on the sale in Canadian dollar terms regardless of what currency the deal is priced in. Your proceeds, and…
Read the full answer →Yes, nothing requires an earn-out to be open-ended, and buyers commonly negotiate a maximum aggregate earn-out payment so their total purchase price…
Read the full answer →Maybe, but a significant investment portfolio is exactly the kind of asset that can put the exemption at risk. The Lifetime Capital Gains Exemption…
Read the full answer →Yes, and this is a common approach where environmental risk is a real concern, most often where the business includes owned real property or a history…
Read the full answer →This is a genuine risk worth taking seriously, and not just from the seller's side. If a carve-out strips valuable assets out of the corporation,…
Read the full answer →In practice, purchase funds for a business sale are typically sent by wire, lawyer's trust account to lawyer's trust account, rather than by certified…
Read the full answer →The exemption isn't limited to common shares — the underlying test looks at whether the shares are shares of a qualifying small business corporation,…
Read the full answer →Selling to a corporation you still partly control puts your transaction under closer scrutiny, because the exemption and the tax rules around it are…
Read the full answer →Yes, this is one of the foundational qualifying conditions, separate from how the corporation's assets are actually used. The exemption applies to…
Read the full answer →It depends entirely on what the error actually was, not on the fact that an error happened. If it was a purely administrative or reporting mistake that…
Read the full answer →This is worth checking carefully, because renting out space your business isn't actually using is generally treated as an income-producing, non-active…
Read the full answer →The size of your corporation's retained earnings, as an accounting figure, isn't itself what the exemption test looks at — what matters is what those…
Read the full answer →Possibly not, and this is a common trap for owners who recently reorganized, incorporated, or acquired their shares shortly before a sale.…
Read the full answer →Quite possibly, and this fact pattern is actually treated differently than a corporation renting out excess space to strangers. If you personally own…
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