Asset or share is the first real decision in a business sale, and it decides who carries the tax and who inherits the liabilities. Buyers usually want the assets. Sellers usually want the shares. The price you agree should reflect which one you picked.
Our charges include applicable taxes. Disbursements are extra and billed at cost — itemized upfront, in writing, never hidden.
From $3,388.87 taxes included
In an asset purchase the buyer takes a named list of things: equipment, inventory, goodwill, the customer list, the phone number, the domain, the lease. The corporation stays with the seller, and so does its history — its CRA accounts, its old contracts, its lawsuits. The buyer assumes only the liabilities the agreement says it assumes, and nothing else comes along by accident.
In a share purchase nothing inside the business moves. The buyer buys the shares of the corporation, and the corporation keeps its name, its bank account, its HST number, its contracts, its employees and every obligation it ever took on — including the ones nobody has found yet. You are buying the company's past as well as its present.
That difference shows up as paperwork. An asset deal needs each material contract assigned, the landlord's consent to <a href="/commercial-lease-assignment-lawyer-ontario">an assignment of the lease</a>, licences reissued, and registered security discharged. A share deal skips most of that, until you read the change-of-control clauses — leases, franchise agreements, supply contracts and bank loans often treat a share transfer as if it were an assignment.
If the deal includes the real estate, an asset purchase moves title and attracts <a href="https://www.ontario.ca/laws/statute/90l06">land transfer tax</a>. A share purchase does not, because the registered owner never changes. On a deal where the building is most of the value, that single point sometimes decides the structure on its own. Price it before you commit to either route.
A seller who sells shares realizes a capital gain, and where the shares qualify as small business corporation shares the seller may be able to shelter part of that gain using the lifetime capital gains exemption under the <a href="https://laws-lois.justice.gc.ca/eng/acts/I-3.3/">Income Tax Act</a>. Qualification depends on what the company owns, what it does, and how long the shares have been held. It is tested, not assumed, and it is normally planned for well before closing.
A buyer who buys assets gets a fresh cost base in the equipment and the goodwill, which produces depreciation and amortization deductions in the years after closing. A buyer who buys shares inherits the corporation's existing tax cost and its tax history instead. The gap between those two positions is real money, and it is what the price negotiation is usually about.
HST follows the same split. A share sale is exempt, because shares are a financial instrument. An asset sale is a taxable supply of each asset, though the <a href="https://laws-lois.justice.gc.ca/eng/acts/E-15/">Excise Tax Act</a> lets buyer and seller jointly elect out of the tax where the buyer is acquiring substantially everything needed to run the business. <a href="/hst-business-sale-lawyer-ontario">How that election works</a> is worth reading before you sign.
In an asset deal the agreement should allocate the price across equipment, inventory, goodwill and any restrictive covenant, and both sides should file consistently with that allocation. Allocation is negotiable, and buyer and seller want it pulled in opposite directions. Settling it in <a href="/letter-of-intent-lawyer-ontario">the letter of intent</a> avoids a fight two weeks before closing.
Some things cannot be moved. A liquor licence, a regulated professional practice, a municipal permit, a long-standing supply arrangement or a government contract may be tied to the corporation and not to the business. Where the value in the deal is really the licence, a share purchase with tight indemnities is often the only structure that works.
Employees do not transfer with assets. The seller ends their employment and the buyer makes fresh offers. But the <a href="https://www.ontario.ca/laws/statute/00e41">Employment Standards Act, 2000</a> deems that employment continuous where the buyer hires the seller's employees, so service dates carry over for statutory purposes — unless the buyer hires them more than 13 weeks after the earlier of the sale and their last day with the seller. In a share deal nothing changes.
Lenders and franchisors have views. A bank financing the purchase will want security over identified assets and may prefer an asset structure. A franchisor will require its own consent, its own transfer documents and, on most resales, delivery of a disclosure document under the <a href="https://www.ontario.ca/laws/statute/00a03">Arthur Wishart Act (Franchise Disclosure), 2000</a>. Its consent is a closing condition either way.
Structure is not binary in practice. A share purchase can be preceded by the seller stripping out assets it wants to keep. An asset purchase can be paired with a holdback, an escrow or a specific indemnity covering the risks a share buyer would otherwise carry. What matters is that risk allocation and price were decided together — see <a href="/buying-selling-a-business">how we handle both</a>.
Usually an asset purchase. The buyer takes only the liabilities it agrees to take, gets a fresh cost base in the equipment and goodwill for future deductions, and does not inherit the corporation's tax history or old claims. A share purchase can still be the right answer where a licence, a contract or a lease cannot be moved.
Yes, and that is what usually happens. The buyer prices the tax cost of inheriting the seller's low cost base and the risk of unknown liabilities, then takes that off the price or covers it with a holdback and specific indemnities. What matters is that the structure and the price are agreed together, not one after the other.
No. Ontario repealed its bulk sales legislation, so there is no bulk sales affidavit, no waiting period and no creditor notification step on an asset sale. Buyers protect themselves the ordinary way instead: lien and execution searches, tax and WSIB clearances, a holdback from the closing funds, and indemnities in the purchase agreement.
Only if the agreement says so. Business names, domains, social accounts, review-site listings, the phone number and the accounting file each have to be listed as purchased assets and then actually transferred. A registered business name is assigned separately from a corporate name. Put the transfer steps in the closing agenda, not in an email afterwards.
Yes. The interests conflict on structure, price allocation, representations and the indemnity, so one lawyer cannot act for both. Our published fee for a straightforward Ontario purchase or sale starts at $3,388.87 with taxes included, searches and filings extra at cost. Larger deals are quoted in writing after a short call — see our pricing.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.