A. Beth Moore, B.A., LL.B.

Legal Services for Business: Business Sales and Purchases

There are two ways to buy or sell a business. The business owner can sell the assets of the business, such as the tools, equipment and other property used in the business and the inventory of the business. This type of transaction may involve the assignment of a lease, assignment of trademarks and contracts and the transfer or termination of the employees of the business. Purchasers will often prefer to purchase the assets of the business because they can, to some extent, pick and choose what assets they will take and the potential liabilities of the business will remain with the seller. The second way is for the purchaser to buy the shares of the corporation that operates the business.

Sellers will often prefer to sell the shares of the business in order to take advantage of the capital gains exemption applicable to sales of shares of private companies. The sale transaction is also less complicated in some ways in that the contracts of the business do not have to be assigned individually and conveyancing documents are not required to transfer the various assets. However a higher level of due diligence is required on the part of the purchaser in order to assess the risks of acquiring the corporation’s liabilities for taxes, legal proceedings and contractual obligations. If you are buying or selling a business you will need experienced legal counsel to help you negotiate the agreement of purchase and sale, carry out your investigations and complete the transfer of the assets or shares. I have many years of experience in acting for both buyers and sellers on purchases and sales of businesses. Contact me before you sign an offer so that you do not commit yourself to legal obligations without legal advice.