Purchase & Sale of Business
Howard Nightingale has successfully practiced Corporate and Commercial law in Toronto since 1982.
Getting It Right the First Time
Regardless of which business model you are purchasing, due diligence – getting it right to begin with – can potentially save a great deal of aggravation and money at some point in the future. Sometimes it’s a case of not even knowing the right questions to ask.
We at Howard Nightingale, do:
To implement the PURCHASE of a business Howard Nightingale provides the following services:
- Review the executed agreement of purchase and sale.
- Request the statement of creditors under the Bulk Sales Act and tax clearance certificate under the Retail Sales Act.
- Search for arrears of business taxes, corporation taxes and other taxes and/or rates constituting statutory liens.
- Review the bill of sale.
- Prepare any personal property security agreement.
- Search under the Bill of Sale Act, Corporation Securities Registration Act, Bankruptcy Act, Personal Property Security Act, Bank Act and other applicable legislations.
- Search for executions.
To implement the SALE of a business and assets, Howard Nightingale provides the following services:
- Review the executed agreement of purchase and sale.
- Prepare the bill of sale.
- Prepare a statement of creditors under the Bulk Sales Act.
- Obtain a tax clearance certificate under the Retail Sales Act.
- Prepare a statement of adjustments.
- Prepare insurance releases.
- Collect and remit retail sales tax.
- Prepare a statement as to payment of creditors (if required).
- Prepare consents or waivers from creditors of the seller and prepare statement of affairs.
- Attend and complete closing.
- Report to client.
If you have any questions or concerns about purchasing or selling a business please contact Howard Nightingale.
Frequently Asked Questions
A Bill of Sale is the legal document that formally transfers ownership of tangible personal property from the seller to the buyer. It serves as your permanent proof of ownership and is a core requirement for any asset-based transaction.
Modern due diligence must include a “Digital Asset Audit.” This ensures the legal transfer of domain names, social media handles, customer databases, and software licenses, along with the necessary passwords and administrative access.
Yes. An execution search checks if there are any court judgments against the seller. If a judgment exists, a creditor might have a legal right to the proceeds of the sale, which could delay or block the transaction.
A non-compete clause prevents the seller from opening a similar business across the street and stealing back the customers they just sold to you. To be enforceable in Ontario, these clauses must be reasonable in time and geographic scope.
In a Share Purchase, employees generally stay with the corporation. In an Asset Purchase, the buyer typically “terminates and rehired” employees. Legal advice is critical here to avoid triggering massive severance payouts under Ontario’s Employment Standards Act.
The “Statement of Adjustments” balances the costs between the buyer and seller on the closing date. This includes pro-rating expenses like rent, utilities, and property taxes, ensuring the seller pays for everything up to the minute of the sale and the buyer takes over from that point.
A Personal Property Security Act (PPSA) search reveals if any of the business’s equipment, vehicles, or inventory are being used as collateral for a loan. This prevents you from buying assets that a bank could later seize because of the seller’s debt.
This is a document issued by the government confirming that the business has paid all its retail and corporate taxes up to the date of sale. Obtaining this is vital for a buyer to ensure they aren’t held responsible for the seller’s unpaid tax debts after the closing.
In an Asset Purchase, you buy specific items (equipment, inventory, brand), which allows you to leave behind the seller’s past liabilities. In a Share Purchase, you buy the entire legal entity, which is often easier for maintaining existing contracts and licenses but carries the risk of inheriting the company’s legal and tax history.
Due diligence is the comprehensive investigation of a business before the sale is finalized. It involves verifying financial records, inspecting physical and digital assets, and searching for any hidden liabilities, liens, or legal disputes that the buyer would be inheriting.
Your information will always remain private and confidential.