- A buyer's lawyer will want to confirm the corporation itself is exactly what it appears to be, and this is often the first thing due diligence turns up gaps in.
- Buyers — and their accountants — will look hard at the financial statements.
- - [ ] Pull together copies of all material contracts — supplier agreements, customer contracts, equipment leases, and the premises lease.
Most business owners think about selling only once they're ready to sell — but the businesses that sell smoothly, for the price the owner expects, are usually the ones where someone started preparing well before the first buyer conversation. Buyers scrutinize everything from corporate records to customer concentration, and gaps discovered mid-negotiation tend to either delay the deal or chip away at the price.
This checklist walks through what an Ontario business owner can reasonably get in order before listing, so that when a buyer's due diligence request lands, you're answering it instead of scrambling to create it.
Start With the Corporate Record
A buyer's lawyer will want to confirm the corporation itself is exactly what it appears to be, and this is often the first thing due diligence turns up gaps in.
- [ ] Ensure the minute book is complete and up to date — director and shareholder resolutions, share issuances, and any corporate changes should all be properly documented and signed.
- [ ] Confirm articles of incorporation and any amendments are on file and match what's on the public record.
- [ ] Obtain a current corporate profile report and/or certificate of status from the Ontario Business Registry — a standard confirmation of the corporation's existence, good standing, and registered information that buyers will typically request as part of closing.
- [ ] Confirm the business name being used matches what's registered, particularly if the business trades under a name other than its full corporate name — a mismatch here can require registration under the Business Names Act before it's fully addressed.
- [ ] Identify any related-party transactions, loans, or guarantees between the corporation and its owners that will need to be disclosed or unwound.
Get the Financial Picture in Order
Buyers — and their accountants — will look hard at the financial statements. See our companion article on cleaning up financial statements for a deeper dive; at a high level:
- [ ] Reconcile bookkeeping so financial statements accurately reflect the business's actual performance.
- [ ] Separate personal or discretionary expenses run through the business from genuine operating costs, and be ready to explain and support any add-backs.
- [ ] Ensure tax filings are current and any outstanding tax matters are resolved or at least clearly disclosed.
- [ ] Gather several years of financial statements, not just the most recent year, so a buyer can see trends rather than a single snapshot.
Review Contracts, Leases, and Key Relationships
- [ ] Pull together copies of all material contracts — supplier agreements, customer contracts, equipment leases, and the premises lease.
- [ ] Check contracts for change-of-control or assignment clauses that could require a counterparty's consent if the business is sold — this is especially important for a commercial lease, where landlord consent to assignment is a common closing condition.
- [ ] Identify any customer or supplier concentration — a business that depends heavily on one or two relationships is a known buyer concern, and being ready to speak to it directly is better than having a buyer discover it unprompted.
- [ ] Confirm the status of any licences, permits, or regulatory approvals the business operates under, and whether they transfer with a sale or need to be reapplied for.
Sort Out Employees and People Issues
- [ ] Ensure employment records, contracts, and any outstanding entitlements are documented and current.
- [ ] Identify key employees whose departure could affect the business's value, and think through retention before a sale process begins.
- [ ] Understand how a sale affects employees depending on structure — under the Employment Standards Act, 2000, a purchaser who hires the seller's employees as part of a going-concern sale generally must recognize their prior service, which differs from a straight share sale (the employer entity doesn't change at all).
- [ ] If an owner plans to stay on after the sale as an employee of the purchaser, note that this is one of the narrow exceptions that still permits a non-compete agreement — general employee non-competes have otherwise been prohibited under the ESA since October 25, 2021 (confirm this is still current with your lawyer).
Address Intellectual Property and Assets
- [ ] Confirm ownership of trademarks, domain names, trade names, and any proprietary processes or technology — and that ownership sits with the corporation, not personally with the owner, unless that's intentional and addressed in the deal.
- [ ] Conduct a PPSA search against the corporation's assets to identify any existing registered security interests that would need to be discharged or addressed before or at closing.
- [ ] Take stock of equipment and inventory, and reconcile it against what's on the books.
Think Through Deal Structure Early
Even before a buyer appears, it's worth understanding the choice between a share sale and an asset sale — it affects almost everything else on this list, from tax treatment to how contracts transfer. A share sale moves the corporation, and its history, to the buyer intact; an asset sale lets specific assets and liabilities be picked out deal by deal. Discuss which fits your situation with a lawyer and accountant before you're mid-negotiation.
A Simple Pre-Sale Readiness Table
| Area | Sign of Readiness |
|---|---|
| Corporate records | Minute book complete; certificate of status obtainable on request |
| Financial statements | Multiple years available, reconciled, add-backs documented |
| Contracts & leases | Assembled, reviewed for consent/assignment clauses |
| Employees | Records current; key-person risk identified |
| IP & assets | Ownership confirmed; PPSA searches clean or explained |
| Deal structure | Share vs. asset trade-offs understood in principle |
Frequently asked questions
How far in advance should I start preparing to sell my business?
There's no fixed timeline that fits every business — it depends on how organized your records already are. Generally, the earlier you address gaps like the ones above, the smoother the eventual due diligence process tends to go.
Do I need a lawyer before I even have a buyer?
Getting legal input early — on corporate housekeeping, contract review, and deal structure — can prevent problems that are harder and more expensive to fix once a buyer is at the table and a timeline is running.
What's the single most common issue that delays a business sale in Ontario?
This varies by business, but incomplete corporate records, unclear financial add-backs, and lease or contract consent requirements are recurring sources of delay that early preparation can address before they become urgent.
Should I get the business valued before I start preparing it for sale?
A valuation can be a useful reference point. Valuation is business- and industry-specific, with no reliable general rule of thumb — speak with a qualified valuator or accountant about what's appropriate for your business.
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