The purchase agreement is where the deal stops being a conversation. Its job is narrow and unglamorous: to say exactly what is being sold, for how much, on what conditions, and who carries the cost when something turns out not to be as described.
Our charges include applicable taxes. Disbursements are extra and billed at cost — itemized upfront, in writing, never hidden.
From $3,388.87 taxes included
Start with what is being sold. In a share deal that is a stated number of shares of a named class, free of encumbrances, with the corporation's share register confirming the seller owns them and the <a href="https://www.ontario.ca/laws/statute/90b16">Business Corporations Act (Ontario)</a> formalities in order. In an asset deal it is a schedule — equipment by serial number, inventory, goodwill, the business name, the domain, assigned contracts — plus an equally clear list of exclusions.
Then price and how it moves. The deposit and who holds it, the balance on closing, any vendor take-back note and the security for it, any earn-out and how it is measured, the allocation of price across asset classes, and the closing adjustments: inventory counted on the day, rent and utilities apportioned, prepaid amounts credited to whoever paid them.
Conditions are the deal's exit doors. Satisfactory <a href="/business-due-diligence-lawyer-ontario">due diligence</a>, financing, the landlord's consent, franchisor approval, WSIB and tax clearances, key contracts assigned, key employees signing on. Each condition needs a deadline, a named party for whose benefit it exists, and a stated consequence if it is not met — usually the deposit returned and the deal at an end.
The closing agenda is not filler. Discharges of registered security, corporate resolutions and updated registers, the HST election signed, employment offers accepted, keys, passwords, supplier accounts, and the seller's undertaking to complete anything outstanding. Deals go wrong at closing far more often over a missing discharge than over a negotiated clause.
Representations and warranties are how the buyer is told what it is buying. The financial statements are accurate; there are no undisclosed liabilities; taxes are filed and paid; there is no litigation; employees are as listed and paid up to date; the equipment works; the business holds the licences it needs. In a share deal the list runs long, because the buyer takes the corporation's entire history.
What matters is not the list but the qualifiers. "To the seller's knowledge" pushes the risk of an unknown problem back onto the buyer. A disclosure schedule that carves out everything the seller has thought of narrows the promise to almost nothing. Read the exceptions before you read the promises, because that is where the risk actually sits.
Then survival and limits. Most business representations survive closing for a stated period — often a year or two — while title, authority and tax representations survive longer. A cap limits the seller's total exposure and a minimum threshold stops small claims. These are negotiated numbers, not standard ones, and they decide what the indemnity is really worth.
An indemnity without security is a promise. Hold part of the price in trust, take security over the vendor take-back note, or set the indemnity off against future payments. In owner-operator deals a holdback for a defined period is the most reliable protection a buyer gets. Our published fee for a straightforward purchase or sale starts at $3,388.87, taxes included — <a href="/pricing">see pricing</a>.
Non-competition and non-solicitation. A buyer paying for goodwill is paying for the seller not to reopen down the road. Ontario treats covenants given on a sale differently from covenants imposed on employees, and where the seller stays on after closing the drafting decides which set of rules applies — <a href="/non-compete-business-sale-ontario">the detail is here</a>.
Transition. Who trains whom, for how long, paid or unpaid, and what happens if the seller stops showing up. Customer introductions, supplier accounts transferred, social media and review-site logins, the accounting file, equipment manuals and service records. Set it out in the agreement. Goodwill that is never handed over is goodwill you did not actually buy.
The lease. In an asset deal the lease is assigned and the landlord must consent; in a share deal the change-of-control clause usually requires the same consent on the same terms. Either way it belongs in the conditions, and the seller normally stays liable to the landlord unless released — <a href="/commercial-lease-assignment-lawyer-ontario">assigning a commercial lease</a>.
Tax mechanics. The joint HST election on an asset sale, the price allocation both sides will file, any restrictive-covenant election, and where real property is included, who accounts for the tax on it. These documents are signed at closing but have to be agreed months earlier — <a href="/hst-business-sale-lawyer-ontario">HST on a business sale</a>.
Not strictly, but skipping the letter usually costs more. It settles structure, price mechanics, exclusivity and timetable cheaply, so the agreement becomes drafting rather than negotiating. Where the parties already agree on everything and the deal is small, going straight to a purchase agreement with a due diligence condition is reasonable.
Part of the purchase price stays in a lawyer's trust account after closing and is released only if the identified risks do not materialize. Length depends on the risk: a few months for inventory and receivables, longer where employee entitlements, tax or a licence transfer is the concern. It is the most reliable protection a buyer gets.
It depends how the clause was written. A well-drafted condition names whose benefit it exists for, so that party can waive it and proceed, or terminate and take the deposit back. Silence causes arguments. Deadlines can be extended, but only in writing signed by both sides — verbal extensions are where deals fall apart.
Yes, in several ways. The seller's principals usually give the indemnity personally or guarantee the corporation's. The seller stays liable on an assigned lease unless the landlord grants a release. And a corporation that distributes the proceeds and dissolves can leave its directors exposed to later claims. Plan the wind-up with your accountant.
Four to eight weeks is typical for an owner-operated Ontario business. The pace is set by third parties, not by the lawyers: landlord consent, franchisor approval, lender conditions, WSIB and tax clearances, and licence transfers. Where none of those apply and financing is already in place, a deal can close in a couple of weeks.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.