1000 plain-language Q&As about Ontario business purchase and sale. Browse below, or search the whole library.
Yes, and notice provisions of exactly this kind are standard in Ontario purchase agreements. A seller reasonably wants to know about a potential claim…
Read the full answer →Yes, sellers are routinely asked to sign one or more statutory declarations at closing. Unlike an ordinary signed statement, a statutory declaration is…
Read the full answer →Your contractual right to make the claim does not disappear, but your practical ability to collect on it can be seriously undermined. An indemnity is…
Read the full answer →There's no default rule here — it depends entirely on what the purchase agreement, or a separate transition arrangement, actually says. Some deals have…
Read the full answer →Yes, generally, if you backed out without a legal basis to do so — no unmet condition or valid termination right — that's a breach of the purchase…
Read the full answer →Yes. Vendor take-back security does not have to cover the entire purchased business, and a seller can register a security interest under Ontario's…
Read the full answer →Transfers made to insiders, such as family members, related companies, or directors, shortly before a business becomes insolvent can potentially be…
Read the full answer →If the seller understated the scope of pre-sale customer warranty claims — an existing liability most purchase agreements require sellers to disclose…
Read the full answer →If a lawyer gave a professional undertaking to deliver a specific document after closing, that's treated as a serious professional commitment, not just…
Read the full answer →A personal guarantee is a separate obligation the individual owner gave directly to the lender, and it generally survives the company's bankruptcy —…
Read the full answer →Selling a business operating under a sublease adds a layer of complexity, because you're now dealing with two separate lease relationships instead of…
Read the full answer →Yes, and skipping them is one of the more common mistakes in family sales. Disclosure schedules attach to the representations and warranties in a…
Read the full answer →Yes. Transfers between spouses are often treated differently under Canadian tax rules than transfers to a child, since transactions between spouses can…
Read the full answer →Selling transfers the business — its assets, and often its contracts, employees, and goodwill — to someone who will keep operating it, in exchange for…
Read the full answer →Yes, and this is a common and sensible feature of a purchase agreement where the deal includes real property along with the operating business. General…
Read the full answer →Yes, generally — a properly documented private settlement, such as a signed settlement agreement or minutes of settlement, is a binding contract in its…
Read the full answer →Often, yes — in a share sale, the corporation that holds the business's licences doesn't change, so there's typically no licence "transfer" needed at…
Read the full answer →It matters, but perhaps not as much as buyers hope. In a share purchase, the same corporate employer continues, so the collective agreement, union…
Read the full answer →Generally, no — a typical exclusivity or no-shop clause doesn't distinguish between shopping the business openly and doing it quietly. If the clause…
Read the full answer →To some extent, yes, because buyers are paying for expected future performance, and an industry-wide decline is a real factor in that expectation even…
Read the full answer →There's no fixed rule, and either approach can be reasonable depending on the offer and the buyer. Countering, even a low offer, keeps a conversation…
Read the full answer →There's no legal requirement either way, and reasonable sellers do it differently. Sharing your valuation, or the reasoning behind your asking price,…
Read the full answer →It's worth thinking about, but generally in the opposite direction from how the question is often framed: fixing known issues before you set your…
Read the full answer →Explained upfront, generally — seasonal revenue patterns are extremely common in many industries, and buyers and their advisors are used to seeing…
Read the full answer →Often yes, and not just as a matter of courtesy — a spouse who has never worked in the business can still have a legal or financial interest in it that…
Read the full answer →Generally, yes, as long as none of the LOIs you've signed actually contains a binding exclusivity or no-shop commitment. Signing preliminary,…
Read the full answer →It's common, and reasonable, for a seller or their broker to require a signed confidentiality agreement before revealing the business's identity at…
Read the full answer →Yes, and most sellers benefit from doing this rather than signing with the first broker they speak to. Interviewing more than one lets you compare not…
Read the full answer →Yes, a software company can still be sold, but open-source dependencies need to be identified and understood before closing, because not all…
Read the full answer →Software escrow is more commonly used to protect a customer licensing software from a vendor, by having source code held by a neutral third party and…
Read the full answer →Not by simply dividing one gain in half after the fact — the exemption is personal to whoever actually realizes a capital gain on their own qualifying…
Read the full answer →Yes, a purchase agreement can be structured this way, sometimes called a split or staged closing, where the main components of the deal — the core…
Read the full answer →Yes, a spousal guarantee does not have to cover the full loan amount, and like a limited guarantee more generally, a spouse can negotiate a guarantee…
Read the full answer →Not as a strict universal legal requirement in every single case, but most commercial lenders insist on it as a practical condition before they will…
Read the full answer →A discrepancy here isn't unusual, and most purchase agreements anticipate it by building in a process rather than leaving it to be argued out on…
Read the full answer →Yes, and doing this thoughtfully can actually help your eventual decision, since stepping back, even partially, tests something you'll need to know…
Read the full answer →Possibly, yes — assigning a lease to your buyer does not automatically end your own obligations to the landlord. In Ontario, a tenant who assigns a…
Read the full answer →Possibly, and this is one of the most commonly misunderstood parts of a listing agreement. Many agreements are exclusive, meaning the broker is…
Read the full answer →Yes — you're not obligated to keep engaging with any particular buyer, and slowing down or pausing with someone who's pushing for detail well beyond…
Read the full answer →It depends heavily on whether you're buying assets or shares. In an asset purchase, avoiding a specific piece of litigation is fairly direct — you…
Read the full answer →Yes — buying an initial stake with a contractual option to acquire the remaining shares later is a recognized structure, often used where a seller…
Read the full answer →Yes — in an asset purchase, you assume only the contracts you choose to assume, and there's no obligation to take on ones you consider unfavourable,…
Read the full answer →Yes, this is a standard and common approach, usually structured as a vendor take-back, where you accept payments over an agreed period rather than the…
Read the full answer →If the CRA decides after the fact that the transaction didn't actually meet the going-concern test, the joint election is treated as never having…
Read the full answer →Once a receiver is appointed, typically by a secured creditor or the court, the receiver generally takes over control of the relevant assets along with…
Read the full answer →Not necessarily, but the listing agreement you signed decides the answer, not just how unhappy you feel. Most brokerage agreements for a business…
Read the full answer →You can, if your lease allows subleasing, but it's legally a very different arrangement from an assignment and usually the wrong tool for a genuine…
Read the full answer →Possibly, yes. Successor employer status under the Employment Standards Act's continuity rule turns on whether you've acquired and are continuing a…
Read the full answer →Generally yes, in the right circumstances, even though it can feel counterintuitive. A clause where you confirm satisfaction with your own due…
Read the full answer →Potentially yes, and this is a separate claim from any indemnity claim you have against the seller under the purchase agreement — pursuing one doesn't…
Read the full answer →If actual revenue is materially lower than what the seller represented in the purchase agreement, this generally supports an indemnity claim for breach…
Read the full answer →Generally no, not automatically. If the seller under the purchase agreement is a corporation rather than an individual, the corporation is the party…
Read the full answer →This depends heavily on the deal's structure and who actually signed as "Seller" in the purchase agreement. In a share sale, the individual shareholder…
Read the full answer →Yes, this is a real risk, and it's one of the more serious mistakes a franchisee can make in a resale. Franchise agreements almost universally require…
Read the full answer →Generally, exposure is limited to whatever binding provisions you actually breached, not to the full value of the deal you decided not to complete —…
Read the full answer →Yes, and this is one of the more serious risks of closing a sale without formal landlord sign-off. If the lease requires consent to assign and that…
Read the full answer →This question usually runs the other way — if a buyer you shared information with under a confidentiality agreement tells a competitor your business is…
Read the full answer →It's possible, particularly if you bought directly from a struggling owner outside any formal, court-supervised process. If the company later ends up…
Read the full answer →If the seller represented in the purchase agreement that this contract was assignable — a standard representation in most deals — and it turns out the…
Read the full answer →Yes, and it is a common approach precisely because tax risk does not behave like ordinary business risk. General representations about contracts,…
Read the full answer →Real pressure to accept the first offer without a real conversation about your options is worth taking seriously, though urging you to seriously…
Read the full answer →Yes, this is one of the clearer warning signs in a business sale. A seller pressing to skip normal due diligence, rush to closing, or discourage you…
Read the full answer →It's worth noting, though not automatically a reason to walk away. Some legitimate buyers are simply cautious about revealing their full strategy early…
Read the full answer →You can, but the path depends on how your current listing agreement is structured, not just on your own frustration with the pace of results. If the…
Read the full answer →A co-operative is organized differently from an ordinary business corporation, and that difference matters a great deal to how you'd actually buy it.…
Read the full answer →Most tax indemnities in an Ontario business purchase and sale are drafted specifically to cover tax liabilities and CRA reassessments attributable to…
Read the full answer →Yes, in principle, patents are a specific, identifiable asset, and a seller and buyer can agree to carve them out of what's being sold, whether that's…
Read the full answer →There's no legal requirement to tell your family before starting to explore a sale, but there are practical reasons most owners find it worth doing…
Read the full answer →You can, but it takes real scrutiny rather than accepting a seller's list at face value. Add-backs are adjustments a seller proposes to "normalize"…
Read the full answer →You can, if you look past total revenue and dig into how that revenue is actually composed. A business can maintain flat or even growing top-line…
Read the full answer →Potentially, yes, and this is an easy trap for a buyer who assumes a layoff already in progress is simply the seller's problem to finish. Under the…
Read the full answer →Yes, timing can genuinely affect your tax outcome, in more than one way. If you're selling shares personally, the calendar year your sale closes in…
Read the full answer →Yes, title insurance is generally available for real property purchased through a receivership or bankruptcy sale, and many insurers are familiar with…
Read the full answer →Not necessarily, but this needs checking against two separate clocks rather than one. First, an indemnity claim under the purchase agreement is…
Read the full answer →A shrinking industry makes a sale harder, not automatically impossible, and timing still matters more than most owners expect. Buyers in a declining…
Read the full answer →This is a common gap in owner-operated businesses, and it matters enormously depending on how you're structuring the deal. If you're buying the…
Read the full answer →Apprenticeship arrangements involve real obligations toward the apprentice's training and hours, and they don't simply evaporate because the business…
Read the full answer →Trade licences and certifications generally attach to the individual tradesperson who holds them, not to the business as a whole, which surprises a lot…
Read the full answer →Whether a collective agreement continues after the sale depends heavily on the deal structure and, in some cases, on labour relations rules about…
Read the full answer →Manufacturer certifications — the kind that authorize a trades business to install, service, or warranty a particular manufacturer's products — are…
Read the full answer →Whether a licence can be issued to a numbered company rather than your buyer as an individual generally depends on the specific licensing regime, not…
Read the full answer →Potentially, yes. Ontario law recognizes a general duty not to misuse information that was clearly shared under circumstances signalling it was meant…
Read the full answer →Generally, no — a confidentiality agreement on its own typically restricts what a buyer can do with your information, not your own freedom as the…
Read the full answer →If the purchase went through a proper court-approved sale process, this challenge is difficult to sustain, because the court has already reviewed and…
Read the full answer →Yes, and this is one of the most common misunderstandings sellers have about valuation. Earnings are only one input — the price a buyer is willing to…
Read the full answer →Yes, and it's a standard, relatively straightforward check. A Personal Property Security Act search against the seller reveals registered security…
Read the full answer →Yes, and this is a standard part of due diligence on any business that operates from or owns real property. A property tax search (or tax certificate)…
Read the full answer →It can, and the risk again depends heavily on deal structure. In a share sale, liability connected to a past data breach — regulatory exposure, claims…
Read the full answer →It's worth checking directly, since unlicensed or under-licensed software use is a real and sometimes underappreciated liability in a business…
Read the full answer →This is worth investigating specifically if the business imports goods, since customs duties and tariff obligations aren't always visible through a…
Read the full answer →It matters, even though an asset purchase is generally designed to let you pick which liabilities you take on. In a properly structured asset deal,…
Read the full answer →Discovering unrecorded liabilities shortly after closing generally triggers the same analysis as any other post-closing discovery — an indemnity claim…
Read the full answer →Yes, and this is a very common way to structure an asset purchase. Buyers frequently incorporate a new corporation specifically to act as the…
Read the full answer →You can use a numbered company as your purchasing entity, and it will keep your name off the purchase agreement itself, but it's worth being realistic…
Read the full answer →It's possible, but it has to be set up that way in the listing agreement rather than assumed after the fact. Standard listing agreements often expect…
Read the full answer →Often yes, but not without limits. A corporation can generally use its own funds, through a dividend, a share redemption, or the company itself…
Read the full answer →Yes — there's no legal requirement to use a broker to sell a business, and an online marketplace listing is a legitimate way to reach buyers on your…
Read the full answer →This is a common way acquisition financing is actually structured, sometimes described as leveraging the target's own balance sheet, but it needs to be…
Read the full answer →Yes, this is a workable and fairly common approach, particularly where different parts of the business call for different financing, tax treatment, or…
Read the full answer →A short gap between taking possession and the utility accounts actually being switched into your name is common, since utility providers have their own…
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