- Asset sale
- Selling listed assets of the business rather than shares. You keep the corporation; most liabilities stay with you unless assumed by the buyer.
- Bring-down certificate
- Your closing-day certificate confirming your warranties are still true and your pre-closing covenants performed. Read the answer ›
- Bulk Sales Act
- A former Ontario statute requiring creditor statements on sales of business assets. Repealed 22 March 2017; not current law. Read the answer ›
- Due diligence
- The buyer's investigation of the business's finances, contracts, employees, premises, licences and legal exposure before committing to close.
- Earn-out
- Part of the price paid later only if the business hits agreed targets after closing. Common where you and the buyer disagree on value. Read the answer ›
- Exclusivity (no-shop)
- A binding promise you make not to negotiate with other buyers for a set period while the buyer does diligence.
- Goodwill
- The value of a business beyond its identifiable assets: reputation, customer relationships, location and systems. Taxed differently from equipment. Read the answer ›
- Holdback (escrow)
- Part of the price kept in a lawyer's trust account after closing so that a valid warranty or indemnity claim can be paid from it. Read the answer ›
- Indemnity cap and basket
- The cap limits how much you can be made to pay for breaches; the basket is the threshold of losses below which no claim can be made. Read the answer ›
- Lease assignment
- Transferring your commercial lease to the buyer with its remaining term intact. Almost always needs the landlord's consent. Read the answer ›
- Letter of intent
- A short document recording price, structure and main terms before the purchase agreement. Usually non-binding on the deal, binding on confidentiality and exclusivity. Read the answer ›
- Lifetime capital gains exemption
- A deduction under s. 110.6 of the Income Tax Act that can shelter part of the gain on qualifying small business corporation shares. The indexed limit changes each year. Read the answer ›
- Non-competition covenant
- Your promise not to compete with the business you sold, for a set time and area. Generally enforceable in a sale of business if reasonable in scope. Read the answer ›
- Purchase price allocation
- How the price in an asset sale is divided among equipment, inventory, goodwill and other assets. It drives each side's tax result and the CRA can challenge it. Read the answer ›
- Representations and warranties
- Your statements of fact about the business in the purchase agreement. If one is untrue, the buyer's remedy is usually an indemnity claim. Read the answer ›
- Section 116 clearance certificate
- A certificate a non-resident seller needs from the Canada Revenue Agency before closing, so the buyer is not required to withhold part of the price. Read the answer ›
- Section 167 election
- A joint election under the Excise Tax Act so that no HST is charged on the sale of a business where the buyer acquires substantially all it needs to carry it on. Read the answer ›
- Share sale
- Selling the shares of the corporation that owns the business. The corporation, with all its contracts, history and liabilities, carries on under new ownership.
- Successor employer
- A buyer treated as continuing your employment relationship, so employees' prior service counts under the Employment Standards Act, 2000 and a collective agreement binds. Read the answer ›
- Vendor take-back
- Financing you provide the buyer: part of the price is paid over time under a promissory note, often secured and usually ranked behind the buyer's bank. Read the answer ›
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