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Home | Firm Profile | Legal Articles | Top 10 Tips | Links | Taxpage | Trademarkpage | Contact Us | VIDEO Profile Purchase & Sale of Business This site provides general information about legal issues involved in the purchase or sale of shares or assets of a business.
If you are buying or selling a business, and need additional information, assistance or legal representation, contact us without obligation on a privileged and confidential basis at 1-877-283-8290 or 416-367-4222 or by e-mail at david@taxpage.com or click here for a contact form.
As corporate-commercial lawyers we are frequently involved in business purchases and sales, acting for either vendors or purchasers. We help structure the transaction, and then implement the purchase and sale so that on closing the purchaser has title and owns the business. Assets versus Shares The first question is always if assets or shares are being sold. There are generally tax advantages to the vendor in selling shares, and tax advantages to the buyer in acquiring assets. Difficult negotiations often take place on this point. Letter of Intent A letter of intent (LOI) is sometimes entered into outlining the deal. If the LOI is non-binding then it merely a guideline to be used in drafting the purchase agreement, and if the transaction does not close then both parties walk away with no further implications. If it is binding and the purchase does proced due to one of the parties, there may well be a law suit arising. Purchase Agreement The purchase agreement is the detailed document that sets out the specifics of the transaction, and specifies related agreements such as security for any unpaid purchase price. It also contains representations and warranties by the vendor about the business and title to the assets or shares. Unpaid Purchase Price The vendor will sometimes finance part of the purchase price. Security for this loan usually includes a pledge of the shares and a general security agreement over corporate assets, registered under the Personal Property Security Act. Due Diligence The purchaser needs to conduct investigations to ensure that the business being acquired is fully understood and all aspects of the operations are as expected. Searches Searches have to be carried out to ensure that there are no other claims on the shares or assets. This part of the due diligence process is carried out by the lawyer for the purchaser. Closing The completion of the transaction, when the purchase price is paid and title to the assets is transferred, takes place by way of a formal closing, usually held at the office of one of the lawyers. Assistance or More Information If you are buying or selling a business, and need additional information, assistance or legal representation, contact us without obligation on a privileged and confidential basis at 1-877-283-8290 or 416-367-4222 or by e-mail at david@taxpage.com or click here for a contact form.
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