1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
Generally, yes, if Ontario labour relations law's successor-rights provisions apply to your transaction. Where you're found to be continuing…
Read the full answer →Buying enough shares for control — generally just over half, though the exact threshold can depend on the corporation's own governing documents —…
Read the full answer →It depends heavily on your deal structure and on the specific pension plan's own terms, which govern vesting more directly than any general rule about…
Read the full answer →In a share purchase, generally no — the appeal continues as an ongoing matter connected to the same corporate account and employer, and you, as the new…
Read the full answer →Yes, considerably. A carve-out completed before closing means the unwanted asset or liability is already out of the target corporation by the time you…
Read the full answer →Not automatically, but it can, and whether it does depends heavily on what the agreement says, particularly its sandbagging position and its survival…
Read the full answer →No — "commercially reasonable efforts" is a real, meaningful standard, but it's deliberately less demanding than an absolute obligation to do literally…
Read the full answer →Not automatically, and this is one of the most commonly misunderstood parts of buying a business. Structuring a deal as an asset purchase changes the…
Read the full answer →Yes, quite a bit. An outright asset purchase or a full share purchase, completed in one clean transaction, generally leaves you owning what you own…
Read the full answer →It doesn't change statutory continuity of employment, which turns on whether you hired the seller's employees as part of a going-concern sale within…
Read the full answer →No, and this is worth understanding as a general principle of how disclosure functions across the whole agreement, not just in the context of a single…
Read the full answer →Yes, even though it might seem like an unnecessary formality when both sides are already Ontario businesses. A governing law clause states which…
Read the full answer →Yes, significantly. Buyers and valuators typically look past your reported profit to what's called normalized or adjusted earnings, which includes…
Read the full answer →Only partially, and it's important to be clear about exactly which part. A hybrid deal generally gives you asset-purchase-level protection for…
Read the full answer →Normally the cap shrinks with each successful claim rather than resetting, because it is typically drafted as a single aggregate ceiling on the…
Read the full answer →It can, mainly through its effect on buyer choice rather than any change to your business itself. If serious buyers know, or come to learn, that…
Read the full answer →Yes, significantly. A buyer who's also a competitor, or could become one, has a different set of incentives than a purely financial buyer — even a…
Read the full answer →Yes, and this is one of the more consequential drafting details in an asset purchase. An asset purchase agreement works by listing exactly what's…
Read the full answer →Yes, quite a bit, even though the schedules are ultimately meant to reflect facts about the seller's business rather than being a negotiated position…
Read the full answer →Yes, it genuinely matters, both legally and practically. If you have a shareholders' agreement, a spouse with an ownership or financial interest, or…
Read the full answer →Yes, considerably — whose benefit a closing condition exists for determines who can waive it, who can rely on its failure to avoid closing, and who has…
Read the full answer →It depends on exactly how the knowledge qualifier is worded, and this is precisely the drafting fight that separates a strong knowledge qualifier from…
Read the full answer →It can, mainly because undocumented processes are a close cousin of owner dependency — if the way the business actually runs exists only in your head…
Read the full answer →Yes, often significantly, because if the business operates from a leased location, a buyer needs confidence that the lease can actually transfer to…
Read the full answer →Yes, generally, because the lease is often central to whether the business can keep operating where it currently does, and uncertainty about renewal…
Read the full answer →Not in the sense of reviving an old, already-expired claim, but a genuinely new problem generally does start its own fresh clock. Each distinct claim…
Read the full answer →Only partly. An LOI can't force a buyer to close, since the core deal terms are typically non-binding on both sides — that's true whether the buyer's…
Read the full answer →It can meaningfully affect price, though "tank" is usually too strong unless that customer represented an outsized share of your revenue. Losing a…
Read the full answer →"Material" isn't a fixed legal number — it's a qualifying word meant to filter out trivial issues from ones significant enough to actually matter to…
Read the full answer →Only if it's drafted to, and this is a distinction many sellers miss. An NDA focused solely on non-disclosure stops a buyer from telling others what…
Read the full answer →Not really, and it's worth understanding why the benefit runs mostly one way. A newco used as the buyer mainly protects the buyer — isolating this…
Read the full answer →Usually not, if the condition is drafted with any real precision — a well-drafted no-litigation closing condition typically requires more than the bare…
Read the full answer →Only if the LOI, or a separate agreement, actually contains a confidentiality provision — being "non-binding" on price and deal structure doesn't…
Read the full answer →Often both, though in different ways. On price, outdated equipment can lower what a buyer is willing to pay if replacing or upgrading it is something…
Read the full answer →Generally, no — what you originally paid for the business has little bearing on what it's worth today, and buyers value the business based on its…
Read the full answer →Generally, yes — buyers price in the risk that the business's performance depends on you personally, since that risk becomes theirs the moment you…
Read the full answer →Yes, and it's important to separate the two in your own mind before you talk to a buyer. Most buyers will value the operating business — its earnings,…
Read the full answer →It depends heavily on how strong and well-protected that single asset actually is, more than the fact that there's only one of it. A single patent or…
Read the full answer →Yes, generally for a similar reason — a buyer is being asked to rely on a relationship they don't control and didn't negotiate, and if that single…
Read the full answer →Generally, yes, if the employee is hired as part of a going-concern asset purchase and continuity of employment applies under the Employment Standards…
Read the full answer →Not on the terms themselves, generally. Because price and structure are typically non-binding in a business-sale LOI, signing one doesn't usually…
Read the full answer →Generally, yes, and it's worth going in with that expectation rather than being surprised by it. A split deal usually means two sets of purchase…
Read the full answer →It can, particularly in a share purchase, where the corporation's existing WSIB account, including its claims history and any resulting experience…
Read the full answer →In almost every practical sense, it hurts. Even if undocumented cash income is real, a buyer can only pay for earnings they can verify and rely on, and…
Read the full answer →Yes, this is the classic downside of an asset sale compared to a share sale, and it's a big part of why the choice between the two structures matters…
Read the full answer →This is exactly the kind of finding a proper due diligence process is designed to catch, and how it's handled depends on when you find it. If it…
Read the full answer →It depends on the deal structure and whether the claims are resolved or ongoing. In a share sale, past and pending litigation against the corporation…
Read the full answer →This comes up often, and it's usually a paperwork gap rather than a sign the seller is being dishonest: a debt that's genuinely been paid off can still…
Read the full answer →Not exactly "fix it yourself first," but Ontario law does generally expect someone who has suffered a loss to take reasonable steps to limit, or…
Read the full answer →Yes. An earn-out can be tied to essentially any metric the buyer and seller agree genuinely reflects the business's post-closing success, and revenue…
Read the full answer →It depends entirely on what the purchase agreement's dispute-resolution mechanism actually says, since there is no automatic requirement for an…
Read the full answer →Not automatically. An earn-out obligation is a personal contractual commitment the original buyer made to the original seller, and reselling the…
Read the full answer →If the underperformance is genuine, reflecting real market conditions or ordinary business risk rather than anything improper the buyer did, the seller…
Read the full answer →There's no specific legal consequence to you as the owner just because an employee finds out earlier than planned — this is a practical and morale…
Read the full answer →This depends on the deal's structure. In a share sale, the employer entity itself doesn't change — the corporation just has new owners — so payroll…
Read the full answer →Receivership itself doesn't automatically end every employee's job — but in practice, a receiver often does lay off some or all staff, depending on…
Read the full answer →This raises two separate issues worth untangling. First, whether wages were actually properly paid up to closing is a factual and structural question —…
Read the full answer →Generally, no, if you purchased only specific assets from a receiver or trustee and didn't take on unpaid wages as an expressly assumed liability.…
Read the full answer →This kind of language is common, and it generally reinforces rather than undermines the usual non-binding nature of price in an LOI for a business…
Read the full answer →In a share purchase, environmental liability tied to the corporation — contamination on land it owns or operates, or outstanding regulatory obligations…
Read the full answer →This generally requires an actual physical inspection rather than a records search, since equipment compliance with current safety codes isn't the kind…
Read the full answer →Whether this supports a claim depends on what the purchase agreement actually said about the equipment's condition and existence. If the seller…
Read the full answer →In a typical asset purchase, unpaid amounts owing on the seller's existing equipment leases are a liability of the seller or the insolvent estate, not…
Read the full answer →If the purchase agreement represented that the seller owned this equipment outright, or listed it among owned assets in the disclosure schedule, and it…
Read the full answer →The disputed funds generally stay put with the escrow agent, often a law firm or trust company, until the disagreement is resolved through whatever…
Read the full answer →An exclusivity clause — a lease term preventing the landlord from leasing other space in the same plaza or building to a competing business — is a…
Read the full answer →Yes — exploring a sale while genuinely undecided is not just permitted, it's how most sales actually start. There's no legal threshold you need to…
Read the full answer →Yes, and this is common practice rather than something unusual to request. Parties can agree to extend the closing time or date, and a purchase…
Read the full answer →What happens depends heavily on what the purchase agreement actually says about the transition. Many business sales include transition or consulting…
Read the full answer →It takes a closer look than a general payroll summary usually provides, since "family member on payroll" isn't inherently improper — plenty of small…
Read the full answer →There's no legal requirement that a child be involved in the business before buying or inheriting it, but practical and family issues tend to surface…
Read the full answer →A written purchase agreement is strongly advisable even within a family, and treating a business sale as a handshake deal creates real risk for both…
Read the full answer →Yes, a family trust can hold qualifying shares and still allow access to the exemption, but the mechanics work a bit differently than for an individual…
Read the full answer →Yes, seller financing is common in Ontario business sales generally, family or not, and it works the same way here. It's typically structured as a…
Read the full answer →Yes, bank financing is a normal way to fund a partner buyout, and lenders generally look at it similarly to financing any share purchase. They'll want…
Read the full answer →Yes. Equipment being acquired as part of a business purchase can itself serve as collateral for financing that specific portion of the price, working…
Read the full answer →Unlisted, or "off-market," businesses are usually found through direct relationships rather than a public search: industry associations, trade…
Read the full answer →Yes — there's no requirement to go through a broker to buy a business, and industry contacts are actually one of the most common ways serious buyers…
Read the full answer →It's genuinely difficult, and this is one of the real limits of due diligence rather than a gap you can simply search your way around. Court filing…
Read the full answer →It's genuinely difficult to uncover through a standard search, and this is one of the trickier gaps in business due diligence. A guarantee — where the…
Read the full answer →This is harder to uncover through a public search than a simple unpaid-tax-debt check, since ongoing disputes with the Canada Revenue Agency — an…
Read the full answer →It's worth asking directly and reviewing carefully, since government loans and subsidy programs don't always show up on a standard corporate or lien…
Read the full answer →It's worth understanding exactly what the claim is about and against whom, since this affects both risk assessment and deal structure. A claim against…
Read the full answer →It's worth addressing significant HR problems before a sale, though "before you even start planning" is earlier than strictly necessary — you can begin…
Read the full answer →Generally yes, and earlier is better than owners usually expect, because messy contracts are one of the first things due diligence surfaces, and fixing…
Read the full answer →A food premises approval or licence generally does not transfer automatically to a new owner the way a lease might. Food premises are regulated locally…
Read the full answer →In principle, yes — specific performance, a court order compelling the other side to actually complete the transaction, is an available remedy for…
Read the full answer →Not automatically, and not just because they stopped showing up. A partner's ownership, meaning their shares, and their role as an employee or manager…
Read the full answer →Yes, if the purchase agreement contains a valid arbitration clause covering indemnity disputes. Ontario's Arbitration Act generally requires a court to…
Read the full answer →It depends on what your shareholders' agreement says. A shotgun clause, for example, is specifically designed to let one partner initiate a buyout…
Read the full answer →Not automatically. Whether you can be compelled to close despite finding a problem depends on whether that problem falls within something you already…
Read the full answer →A franchisor can't force this on you outright, but they can make it a practical precondition of approving the transfer, similar to how a landlord can…
Read the full answer →No landlord can force this on you against your will, but they can make it a practical precondition of consenting to the assignment — meaning that,…
Read the full answer →Generally, no. In an asset purchase, a buyer only takes on the contracts it expressly agrees to assume in the purchase agreement, so supplier contracts…
Read the full answer →Not automatically, just from signing a standard LOI. Ontario contract law recognizes a general duty of honest performance within existing contractual…
Read the full answer →Break fees aren't a standard or automatic feature of business-sale LOIs in Ontario — they're uncommon in smaller deals and only exist at all if you and…
Read the full answer →It can, and this is a federal immigration matter rather than something governed by Ontario employment or corporate law, so it needs its own specific…
Read the full answer →It depends on what you need the number for and how much is riding on it. A broker's opinion of value is generally faster and less expensive, and it's…
Read the full answer →Yes, generally — how you happened to find a problem doesn't affect your underlying legal right to raise it. What matters for an indemnity claim is…
Read the full answer →A franchise agreement that's genuinely silent on transfers is unusual — most are drafted with detailed transfer provisions precisely because…
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