The Toronto Sale That Collapsed — And the Break Fee That Saved It

The situation

Elena spent years as a personal support worker, driving between homes to help clients who could not get out on their own. Giulia spent hers behind the wheel of a long-haul truck, running routes across Ontario. They met through a mutual friend and kept circling the same idea: patients without a car of their own struggled more to get to dialysis, chemotherapy, and specialist appointments than to get through the illness itself. In their early thirties they pooled their savings, bought two used vans, and started a non-emergency medical transportation company in Toronto, driving patients to and from appointments on contract with clinics and home-care agencies.

A decade later the company had grown into a small fleet with drivers, schedulers, and a handful of staff trained to assist patients with mobility needs. Elena and Giulia still drew modest salaries themselves, reinvesting most of what the business earned back into vehicles, insurance, and staff wages. Neither of them had ever taken a salary that matched what the business was actually becoming worth. When a larger healthcare logistics company approached them about buying the business outright, in the range of several million dollars, they saw a chance to finally be paid for a decade of long hours and thin personal paycheques.

The buyer's development lead, Cristina, ran point on the deal for the other side, moving through the usual stages of a mid-sized business acquisition: a letter of intent setting out the broad terms, followed by a formal share purchase agreement once both sides were serious. That agreement — the contract that sets out who is buying what, for how much, and under what conditions — set the purchase price at around $6 million, subject to two conditions: a due diligence review of the company's finances, contracts, and vehicle fleet, and confirmation of the buyer's financing. Elena and Giulia signed off on legal advice at each stage, understanding that a signed agreement with live conditions is not yet a guaranteed sale — it becomes one only once those conditions are met or waived.

When the buyer tried to walk away

The due diligence period ran for several weeks. Cristina's team combed through the company's contracts, insurance records, driver certifications, and financials, asking follow-up questions almost daily. It closed on schedule, and the buyer's lawyer delivered a written notice confirming the buyer was satisfied and waiving the due diligence condition outright. Under the agreement, that waiver mattered enormously: once a condition is waived in writing, the party who waived it generally cannot revive it later just because they have second thoughts. With the financing condition also satisfied shortly after, the agreement became what lawyers call firm and binding — both sides were now contractually obligated to close on the date set out in the agreement, with no conditions left standing between them and completion.

Two weeks before that scheduled closing date, the buyer's lawyer sent a letter stating the buyer did not intend to proceed. The stated reason was a concern about the renewal of one of the company's larger referral contracts with a healthcare network — something the buyer's own team had already flagged and discussed at length during due diligence, before choosing to waive the very condition that would have let them walk away over exactly that kind of issue. Reading the letter alongside financing conditions that had been tightening across the sector that same quarter, it looked far more likely that the buyer's own funding had become shakier than expected, and the referral-contract concern was being used as after-the-fact cover for a decision made for other reasons. Whatever the real motivation, the contract no longer gave the buyer a door marked due diligence to walk back through. For Elena and Giulia, the letter landed less like a negotiating tactic and more like the ground shifting under a decade of work.

What we did

1. Confirmed the buyer had no contractual out. We reviewed the signed waiver alongside the underlying agreement and confirmed the due diligence condition had been formally satisfied and released in writing weeks earlier. The buyer's letter did not point to any surviving condition — it was simply a refusal to close a binding contract.
2. Put the buyer on formal notice. We wrote to the buyer's lawyer stating plainly that the agreement was unconditional, that failure to close on the scheduled date would be treated as a repudiation of the contract, and that Elena and Giulia reserved all their rights under it.
3. Assessed the real options, not just the ideal one. A court can, in narrow circumstances, order specific performance — forcing a party to complete a purchase it agreed to. It is a real remedy, but it is slow, uncertain in outcome for a private business sale, and would have tied up Elena and Giulia's company in litigation for a year or more while they tried to run it. We laid out that trade-off honestly rather than promising a result we could not guarantee.
4. Turned to the clause built for exactly this. The purchase agreement included a break fee provision, sometimes called a termination fee: if either side walked away from a firm deal without a valid contractual reason, that side would pay the other a set fee instead of being forced to complete or sued for the full value of the deal. Both sides had negotiated it a year earlier as protection against exactly this scenario. We used it as the basis for resolving the standoff rather than escalating it.
5. Negotiated the exit terms, not just the fee. Alongside the break fee, we negotiated the buyer's return of all confidential company data gathered in due diligence, a short non-solicit period so the buyer could not approach staff or referral contacts it had learned about, and a mutual release closing off any further claims from either side.
6. Documented the settlement cleanly. We put the full resolution into a formal termination and release agreement, so Elena and Giulia's business was free to run normally and free to be sold again later without an unresolved dispute hanging over it.

The outcome

The parties settled on a break fee of roughly $180,000, about 3% of the $6-million purchase price the deal had been struck at. The buyer paid it within the agreed window, returned the company's records, and walked away without further claim. Elena and Giulia kept their business, their staff, and their contracts intact — but they did not get the sale they had spent a decade working toward, and the eight months spent in due diligence and negotiation were, in a real sense, time they will not get back. Some of that time carried real cost: accounting and advisory fees run up preparing for a closing that never happened, and a handful of staff who had heard whispers about a possible sale asked pointed questions Elena and Giulia had to answer carefully.

This is what a partial outcome looks like in a deal collapse: nobody got everything, and nobody walked away pretending otherwise. The buyer avoided being sued for the full value of a deal it could no longer afford to close, and closed the matter for a fraction of the purchase price rather than an open-ended legal fight. Elena and Giulia avoided a drawn-out battle over specific performance with an uncertain result and a business left in limbo in the meantime, and walked away with a fair sum for the disruption rather than nothing at all. About four months later, working with a business broker, they relisted the company with a cleaner story to tell prospective buyers — a resolved prior deal, documented and paid in full, rather than an open dispute sitting on the company's books waiting to complicate the next negotiation.

What you can learn from this