Selling & Purchasing Business

Whether you are looking for selling or purchasing a business, our team at YLG will assist you through out the process and ensures you have an optimal experience.

While it is preferable for the seller to sell their shares as opposed to the assets of the business since the gain from selling shares will be treated as a capital gain for income tax purposes, buyers prefer to buy assets of the business to avoid the liabilities associated with the shares of the company.

The essential component of the transaction is a “Share Purchase Agreement”. This agreement should address, among other items, the purchase price (either fixed or based on some form of calculation such as net book value), which may include “earn-out” provisions; the procedure for closing the transaction; interim investigations/due diligence and confidentiality of the negotiations and the information disclosed; representations and warranties about the business; third party contract approvals or consents; and Non-competition clauses.

According to Canada Revenue Agency’s guidelines, when you buy a business in Ontario, Canada, you must consider the following factors:

• Business number (BN) – includes payroll and GST/HST
• Change of ownership
• Value of inventory and other assets
• Capital gains deduction
• Tax implications
• Restrictive covenant