1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
It depends on who's actually going to be disclosing sensitive information during the process. In most business sales, the seller is the one sharing the…
Read the full answer →Yes, and this is standard, sensible drafting rather than an unusual request. Rather than requiring every individual on a buyer's team to separately…
Read the full answer →Buying from a receiver on its own gives you more comfort than buying directly from a struggling owner, since a receiver's role is generally exercised…
Read the full answer →Not before you start planning — early planning can happen quietly, without involving anyone else at all. But before you go to market with buyers,…
Read the full answer →No — a succession plan and a sale to an outside buyer are two different paths, and you don't need to have ruled out or built one before considering the…
Read the full answer →Yes. Even though there's no arm's-length negotiation, an independent valuation still does real work: it establishes a defensible fair-value figure for…
Read the full answer →There's no legal requirement for a written exit plan, and a rough idea is genuinely enough to start having conversations, doing preliminary…
Read the full answer →Yes — the length of an exclusivity period is a negotiated deal point like any other term in the LOI, and there's no fixed or standard duration required…
Read the full answer →Yes. A personal guarantee does not have to be unlimited, and a "limited guarantee," capping the guarantor's exposure to a specific dollar amount or a…
Read the full answer →It depends on how your franchise agreement frames the fee — some agreements set a fixed figure or formula that leaves little room for negotiation,…
Read the full answer →Yes — the term of a listing agreement is a negotiated business term like any other, not a fixed requirement set by law. Brokers often propose a term…
Read the full answer →Yes — this is a common and reasonable point to negotiate before signing a listing agreement, since a broker generally does less work for a buyer you've…
Read the full answer →Generally yes — price is a matter of negotiation, and a seller under financial pressure often has less leverage, which naturally affects what price the…
Read the full answer →Yes, and this is exactly what an asset purchase is built to allow — nothing forces a buyer to assume a particular contract just because the rest of the…
Read the full answer →Without a shareholders' agreement, or a partnership agreement if you never incorporated, you're generally left relying on default rules — Ontario's…
Read the full answer →A missing signature doesn't automatically mean nothing binding happened, since Ontario contract law doesn't strictly require a signed document for an…
Read the full answer →Generally yes, in most cases where the underlying licence itself doesn't automatically transfer — a change in ownership commonly triggers a fresh…
Read the full answer →Generally, a new owner is not personally responsible for violations that occurred under the previous operator's watch, since public health enforcement…
Read the full answer →If non-active assets — excess cash, investments, or property not used in the business — push your corporation's asset mix past what's needed to qualify…
Read the full answer →Generally, no — as a Canadian resident seller, your own tax treatment on the gain from selling your shares or your business's assets is determined by…
Read the full answer →Often yes, without any special federal review, but not always, and size is usually what determines the difference. Federal law requires a "net benefit…
Read the full answer →Yes, a non-resident corporation can directly purchase Canadian business assets without first incorporating a Canadian subsidiary — there's no absolute…
Read the full answer →If a non-resident seller closes without a CRA clearance certificate in hand, the buyer is generally required to withhold a portion of the purchase…
Read the full answer →Not entirely. A non-resident selling shares of a Canadian corporation, or certain other Canadian business property, is still generally subject to…
Read the full answer →Yes, it can, and in some ways such a seller's non-compete sits on firmer statutory ground than one given by a seller who becomes an employee of the…
Read the full answer →Generally no, if the adult child is simply taking a job with a competitor on their own account. A restrictive covenant binds the party who actually…
Read the full answer →It depends entirely on how the covenant is worded. Some non-competes are drafted broadly to prohibit the seller from having "any interest, direct or…
Read the full answer →A buyer doesn't necessarily need to prove an exact dollar amount of lost sales just to establish that a non-compete was breached — breach and damages…
Read the full answer →There is no fixed rule limiting a seller's non-compete to Ontario, or any other specific geographic boundary — the permissible geographic scope depends…
Read the full answer →Yes, a non-compete can still bind a seller who sold only part of their shares, as long as the covenant was validly given as part of that sale and its…
Read the full answer →Yes, it can matter quite a bit. Payments for a restrictive covenant like a non-compete are subject to their own specific tax treatment under the Income…
Read the full answer →A buyer can certainly ask for that, but the broader the covenant reaches beyond what the business actually did, the more exposed it becomes to a…
Read the full answer →It depends on whether the original purchase agreement made the seller's covenant assignable to the buyer's successors, since that is not automatic.…
Read the full answer →Yes, if the clause is drafted to include suppliers, since non-solicitation covenants are not limited by law to only employees or customers — their…
Read the full answer →It depends entirely on which non-solicitation covenant is actually in the agreement, since employee non-solicitation and customer non-solicitation are…
Read the full answer →Generally yes, because employee non-solicitation clauses are usually tied to specific identified individuals, not to a geographic territory the way a…
Read the full answer →Yes, it's common — most business brokers ask for an exclusive listing agreement before investing time in marketing, preparing materials, and reaching…
Read the full answer →It happens more often than it should, but it's a drafting gap worth fixing rather than something to accept as normal. Without a target date or an…
Read the full answer →The fact that figures passed through a broker rather than coming straight from the seller doesn't usually change the seller's own contractual…
Read the full answer →A mismatch between the internal financial statements a seller shows you and what was actually reported to the Canada Revenue Agency is one of the most…
Read the full answer →Not automatically — accepting or rejecting any offer is your decision as the seller, and a broker bringing you a full-price offer doesn't itself force…
Read the full answer →Generally yes, an estate freeze that was properly implemented continues to do what it was designed to do regardless of how many years pass before an…
Read the full answer →Generally, the seller's old liabilities that you didn't expressly assume stay with the seller's corporation, whether your buyer is a brand-new…
Read the full answer →It depends on your deal structure. In a share purchase, generally yes — a human rights complaint against the corporation is a liability of that…
Read the full answer →In a share purchase, generally yes, in the sense that the claim and any effect it has on the corporation's WSIB account and experience rating continue…
Read the full answer →Generally, no — an asset purchase is deliberately structured so the buyer only takes on the liabilities the purchase agreement says it's taking on, and…
Read the full answer →It depends entirely on how the business was bought. In a share purchase, yes — if an employee was terminated and severance became owing before closing…
Read the full answer →It depends on when and how you make that decision. If you're doing an asset purchase and simply choose not to hire someone at all, that person is being…
Read the full answer →It depends on your deal structure. In a share purchase, yes — accrued and unpaid vacation pay is a debt the corporation owes its employees, and since…
Read the full answer →Each lease is a separate contract with its own landlord and its own assignment terms, so one landlord's objection doesn't automatically affect the…
Read the full answer →That's a legitimate, narrow form of asset purchase — you can structure a deal limited to intellectual property like the trademark, trade name, and…
Read the full answer →Open prescriptions and pending referrals don't automatically become the new owner's responsibility just because the practice has changed hands, and…
Read the full answer →Feeling cheated isn't the same as having a legal claim. A properly documented sale, made while the parent had capacity and wasn't unduly influenced, is…
Read the full answer →A properly documented, genuine sale is generally difficult for other family members to unwind after the fact simply because they're unhappy with it.…
Read the full answer →A refusal to close on the agreed date, without a legitimate unmet condition or termination right, is generally a breach of the purchase agreement. The…
Read the full answer →They can, if the judgment creditor has registered its judgment against the seller's property before you close, and this is a real risk that's easy to…
Read the full answer →Yes, this is possible, and it catches sellers off guard more often than almost any other listing agreement term. Many agreements include a "tail" or…
Read the full answer →Possibly, and whether a fee applies depends entirely on the specific terms of the commitment letter or loan agreement, not on whether the funds are…
Read the full answer →Yes, hybrid deals like this happen regularly, usually because the buyer wants asset-purchase protection for one part of the business and the seller…
Read the full answer →Start by checking your shareholders' agreement, since many include a mechanism for exactly this situation — a formula for calculating value, a process…
Read the full answer →Yes, an earn-out style structure, where some of the buyout price depends on the business's performance after the departing partner leaves, can be used…
Read the full answer →Often yes, because professional practices — law, accounting, medicine, and similar regulated fields — typically operate under additional rules from the…
Read the full answer →It's generally worth getting a current valuation rather than relying on an old one, since a business's value can change significantly over time due to…
Read the full answer →Yes, and it's worth insisting on this even though the buyer already knows the business well. Representations and warranties in a partner buyout protect…
Read the full answer →Largely yes, though the paperwork can often be scaled to the situation. A partner buyout is still a share, or sometimes asset, purchase, so it…
Read the full answer →Not automatically. Whether a partner can force a sale generally depends on what's in your shareholders' agreement, not on a general rule of Ontario…
Read the full answer →A completed share sale and a partner's continued physical or operational involvement in the business are legally separate issues, so the answer depends…
Read the full answer →This is possible, but it needs to be addressed as a separate employment or consulting arrangement, distinct from the sale of their shares. Buying out…
Read the full answer →Patient records don't just transfer like office furniture. A departing physician remains subject to the same professional and privacy obligations…
Read the full answer →Yes, and this is a detail that's easy to miss when a buyer focuses only on the liquor licence itself. A bar or restaurant's liquor licence, its…
Read the full answer →In a share purchase, generally yes — Ontario's pay equity obligations attach to the employer, and an incomplete pay equity plan is an ongoing…
Read the full answer →Possibly, but only if the landlord agrees — a guarantee doesn't come with a built-in buyout mechanism under general commercial lease practice, so any…
Read the full answer →Generally yes, in principle, through the legal doctrine of subrogation. A guarantor who pays the underlying debt in full is generally entitled to step…
Read the full answer →Yes, and whether early repayment is allowed, and whether it triggers any penalty, is entirely a matter of what the note itself says, since nothing in…
Read the full answer →Yes, nothing requires a working capital true-up payment to be made as a single lump sum immediately once the final figure is determined. Like most…
Read the full answer →A percentage rent clause — additional rent calculated as a share of the tenant's sales, common in shopping centre and plaza leases — generally…
Read the full answer →It depends entirely on how the guarantee is worded, since this is not something that follows automatically either way. A personal guarantee limited to…
Read the full answer →This is one of the more damaging things a departing tenant can overlook. Some personal guarantees are drafted broadly enough to cover not just the…
Read the full answer →No, not on its own. A personal guarantee is a separate contract between you and the landlord, distinct from the lease itself. Assigning the lease to a…
Read the full answer →A personal guarantee doesn't disappear just because the corporation making the purchase is a newly formed newco — a guarantee is a personal promise you…
Read the full answer →Generally yes in substance, since a guarantee that specifically secures a particular vendor take-back note has nothing left to secure once that note…
Read the full answer →Yes, typically, unless the lender specifically agrees otherwise. A personal guarantee is a separate contract between the guarantor and the lender,…
Read the full answer →Only if you personally guaranteed the loan. A corporation is a separate legal entity from its shareholders and directors, and that separation is…
Read the full answer →Yes, and this is one of the more expensive mistakes a seller can make in a business sale. If the joint election turns out not to actually apply —…
Read the full answer →No, you generally don't need to be physically present. Most business sale closings in Ontario happen as coordinated document and fund exchanges between…
Read the full answer →No, and waiting to "settle" succession before exploring a third-party sale often just delays a decision that doesn't need to be sequential. You can…
Read the full answer →Not automatically, and this is worth confirming early rather than assuming the software and its data simply come with the store. Point-of-sale and…
Read the full answer →What it's actually worth today, not what you originally paid — buyers value equipment based on its current condition, remaining useful life, and what…
Read the full answer →There's no legal rule requiring or preventing this — it's simply a negotiating point between you and the seller or receiver. A buyer willing to retain…
Read the full answer →Yes, considerably, and this is one of the most heavily negotiated tax details in an asset sale. Goodwill and equipment are taxed very differently:…
Read the full answer →Not necessarily, and it's actually common — many business brokers build relationships with active buyers in particular industries precisely because…
Read the full answer →Agreeing to buy a practice and being legally able to close on that purchase are two different things, and a buyer who isn't yet licensed to practice…
Read the full answer →An ongoing complaint against a professional generally follows that individual, not the practice as a whole, since colleges regulate the conduct of…
Read the full answer →Generally, a breach of a representation or warranty by itself is not enough — an indemnity claim typically requires the buyer to show both that a…
Read the full answer →It depends on your deal structure. In a share purchase, yes — unpaid public holiday pay is a wage debt of the corporation, and since the same…
Read the full answer →It can, though there is no fixed rule for exactly how much difference it makes, since this depends on both the specific lender and what the report…
Read the full answer →Yes — testing the market, whether through informal conversations, a business broker, or a confidential valuation, doesn't commit you to actually…
Read the full answer →Generally, yes, if your franchise agreement includes one — a radius restriction is a form of non-compete specific to franchise agreements, typically…
Read the full answer →These are genuinely different decisions, and it's worth separating them before you talk to anyone about selling. Wanting out of day-to-day management…
Read the full answer →Yes, and the difference matters a lot to what you actually keep after tax. When equipment sells for more than its remaining undepreciated tax value,…
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