Closing Day and Post-Closing: What Happens When You Buy or Sell a Business in Ontario

After weeks of due diligence, back-and-forth on the purchase agreement, and satisfying all the conditions, you finally arrive at the moment both sides have been working toward: closing day. For many business owners, this is the culmination of years of building — or the first day of a significant new chapter. Understanding what actually happens on closing day (and in the weeks that follow) helps ensure nothing gets missed and the transaction lands cleanly.

What Is "Closing"?

Closing is the moment at which legal ownership of the business (or its assets, or shares) transfers from seller to buyer. Funds move. Documents are exchanged. The keys — literal and figurative — change hands.

Most Ontario business closings today happen electronically. The parties' lawyers exchange documents via email or a secure platform, and funds are transferred by wire or certified cheque. An in-person closing "table" still happens sometimes, particularly for larger deals or where there are many physical deliverables, but it is no longer the norm.

The closing date is agreed in the purchase agreement. It is common to set closing for mid-morning so that both sides' lawyers have time to confirm that all conditions have been satisfied and all deliverables are ready.

What the Seller Delivers on Closing

In a share purchase, the seller delivers:

• Share certificates for the purchased shares, endorsed in blank or accompanied by a share transfer form.
• Officers' and directors' certificates confirming that the seller's representations and warranties are true as of closing.
• Resignations of directors and officers who are being replaced by the buyer's nominees.
• Updated minute books — the corporation's record of meetings, resolutions, and share history — brought current to closing.
• Releases from departing directors and officers (in favour of the company) and from the company (in favour of departing directors), as negotiated.
• Non-competition agreements signed by the principals of the seller, if required.
• Transition services agreement, if the seller is staying on to help post-close.
• Third-party consents — landlord consent to change of control, lender waivers, key contract consents.

In an asset purchase, the seller delivers:

• Bills of sale transferring ownership of tangible personal property.
• Assignments of contracts, leases, intellectual property, domain names, and other intangible assets.
• PPSA discharge statements confirming that security interests over the assets have been discharged.
• Keys, passwords, access codes to the physical premises and digital systems.
• HST election (if applicable) to transfer the business as a going concern under the Excise Tax Act — ask your accountant whether a going-concern election is appropriate.

What the Buyer Delivers on Closing

The buyer's primary obligation is payment. The purchase price (minus any adjustments or holdbacks) is wired to the seller's lawyer's trust account, held in escrow until all deliverables are confirmed, and then released.

The buyer also delivers:

• Officers' certificate confirming the buyer's representations and warranties are true.
• Directors' resolution authorizing the purchase.
• Assumed liabilities documentation, if the buyer is formally assuming certain debts or obligations.
• Executed copies of any agreements the buyer is also signing (non-competition, transition services, new employment agreements).

The Simultaneous Exchange

The critical feature of a well-run closing is that everything happens simultaneously — or as close to it as possible. The seller's lawyer does not release the documents until the funds are confirmed. The buyer's lawyer does not release the funds until the documents are confirmed in escrow. This is typically managed by the lawyers communicating by phone or a group email chain as each step is completed.

Once both sides confirm that all deliverables have been received and all funds have cleared, the lawyers jointly declare the deal closed.

Post-Closing Obligations

The deal is done — but not everything ends on closing day. Several ongoing obligations typically follow:

Transition period

If the seller agreed to assist the buyer for a period (training, customer introductions, system walkthroughs), this begins immediately after closing. The purchase agreement should specify the duration, scope, and compensation (if any) for transition assistance.

Earn-out and purchase price adjustments

If the deal includes a working capital adjustment or earn-out payments, the mechanics begin post-closing. The seller may have the right to review financial statements during the earn-out period. Make sure both sides understand their rights and obligations under the post-closing adjustment mechanism.

Indemnity period

The seller's indemnity obligations remain live for the survival period agreed in the purchase agreement — typically one to two years. During this period, the buyer should document any issues that arise and consider whether they give rise to a claim under the indemnity.

Holdback release

If a portion of the purchase price was held back in trust, it is released to the seller at the end of the holdback period — unless the buyer has made a valid indemnity claim that reduces the amount. The holdback mechanics should be clearly defined in the purchase agreement.

Government registrations and notifications

After closing, the buyer must update various government registrations:

• CRA business number registration.
• Business name registration with the Ontario government (if applicable).
• HST account transfer.
• WSIB (Workplace Safety and Insurance Board) account registration.
• Any professional or industry licences that need to be transferred or reissued.

The seller should formally close or reassign any accounts the buyer is not assuming.

Notifying customers, suppliers, and employees

The purchase agreement usually contemplates when and how customers, suppliers, and employees are informed. Timing the announcement properly protects the business's relationships during the transition.

Frequently asked questions