Buying an existing business in Ontario usually means an asset purchase agreement or a share purchase agreement, due diligence on what you are actually getting, and a closing that moves the lease, the employees, the contracts and the money on the same day. Smutylo Law+ acts for buyers of owner-managed businesses, at a fixed fee where the scope allows.
In an asset purchase, you buy the business’s equipment, inventory, goodwill and contracts, and leave the seller’s corporation behind with its history. You choose which liabilities you take on. In a share purchase, you buy the corporation itself, with everything it has ever done. Buyers usually prefer assets; sellers usually prefer shares for tax reasons. The structure affects the price, and it is often the first thing to negotiate. See share sale vs. asset sale.
Clinic purchases add regulatory layers. The buyer is often a medical or dental professional corporation, which may carry on only the practice of the profession. The transfer of patient records is governed by Ontario’s health privacy legislation and the regulatory college’s records rules. Equipment leases, the premises lease and any associate agreements all need attention. See medical professional corporations and dental professional corporations.
An employee or management buyout has its own issues — financing a purchase from the person who is currently your boss, and agreeing a transition while you still report to them. See buying the business you work for.
In almost every case, yes. The purchase agreement decides what you are buying, what liabilities come with it and what you can recover if the seller’s statements prove wrong. The lease, employee and HST issues are technical, and mistakes are expensive to fix after closing.
Buyers usually prefer an asset purchase, because they choose what they take on and can leave the seller’s history behind. Sellers usually prefer a share sale, mainly for tax reasons. A share purchase can still make sense for a buyer — for example, where licences, permits or key contracts cannot easily be transferred — with stronger warranties and indemnities to cover the history.
At a minimum: financial statements and tax filings, the lease, material contracts and their change-of-control terms, employee terms, licences and permits, litigation, and searches for registered security interests and judgments against the seller. The depth should match the price and the risk.
For an owner-managed business, from signed letter of intent to closing often takes one to three months. Most delays come from the lender, the landlord and licence transfers.
Yes. The buyer is often a professional corporation, which is limited to practising the profession. Patient records must be transferred in line with Ontario health privacy law and the college’s rules, and the clinic’s equipment leases, premises lease and associate arrangements need to be reviewed before closing.
Book a free 20-minute call. Bring the listing, the seller’s numbers or the draft letter of intent.
Book a Free Call