Asset purchase due diligence checklist

The assets themselves

• Asset list and condition. A precise schedule of exactly which assets are included — equipment, inventory, IP, goodwill — and which are excluded.
• Liens and security. Search for registered security (PPSA) against the assets, so you don't buy something the bank still has a claim on.
• Inventory and receivables. Verify quantities, quality, and which receivables are actually collectible.

Contracts and customers

• Assignability. Confirm the key customer, supplier, and lease contracts can be assigned to the buyer — many need the other side's consent.
• Customer concentration. How much revenue depends on one or two customers, and whether they'll stay after the sale.
• Third-party consents. A list of every landlord, lender, franchisor, or counterparty whose sign-off is needed to close.

Employees

• Employee list and terms. Who's employed, on what terms, with what accrued vacation and entitlements.
• Termination exposure. In an asset sale, employees don't transfer automatically — know the termination costs for anyone the buyer won't hire.
• Key people. Whether the people who make the business work will stay, and on what terms.

Legal and regulatory

• Permits and licences. Every licence, permit, and registration the business needs, and whether it can move to the buyer.
• Litigation and claims. Current or threatened lawsuits, disputes, and warranty claims.
• Compliance. Environmental, health and safety, privacy, and industry-specific compliance history.
• Intellectual property. Who actually owns the name, logos, software, and content, and whether registrations are in order.

The deal and closing

• Purchase price allocation. How the price is split across asset classes — it changes the tax outcome for both sides and should be agreed in writing.
• HST and tax elections. Confirm the section 167 election and other tax elections are handled correctly.
• Reps, warranties, indemnities. What the seller promises about the assets, and what happens if a promise turns out to be wrong.
• Holdbacks and conditions. Money held back for a period, and the conditions that must be met before closing.