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Buying and Selling a Business is a lot more Difficult without the Right Help

Buying or selling a business can be a big step in a person's business journey, so when you are doing so, it is crucial to make sure that you have the best legal help possible. At Buzaker Law Firm, we strive to ensure that your mergers and acquisitions go smoothly and that you can feel comfortable and secure knowing that your business is in the right hands. Our professional and experienced corporate lawyers will do everything in their power to ensure that your transaction runs smoothly and adheres to the law. Your best interest is our number one priority, so rest assured that we'll be right there with you for every aspect of the sale, even the stuff beyond the transaction. With our legal service, you can expect a thorough investigation of the subject of the agreement and the seller or proposed buyers' status, among various other inquiries and due diligence that we pride ourselves on completing efficiently and effectively.

Types of Sales

When buying or selling a business, there are two main types of sales to consider. An asset sale, and a share sale. Both these different sale types have advantages and disadvantages for both buyers and sellers alike, and it's good to weigh your options and figure out which sale type may interest you. In an asset sale, the seller is selling physical property and assets belonging to the company (including but not limited to; buildings, licenses, office supplies, contracts, agreements, and intellectual property). In a share sale, the seller sells shares of a private corporation to a buyer, effectively selling full ownership of the company and all the company's assets and liabilities. Generally, an Asset sale is favourable to the buyer, while the seller prefers a share sale; however, there are many instances where a buyer may choose a share sale, and a seller may select an asset sale. There are many variables to consider and a wide range of pros and cons that our talented lawyers can help you navigate.

Pros and Cons

When considering a share sale, there may be some attractive advantages that may interest a seller. For example, a share sale typically results in a favourable capital gains treatment. The seller would make far more money for selling shares, and the money would only be 50% taxable. Additionally, suppose the company shares are considered Qualified Small Business Corporation (QSBC) shares. In that case, the seller can protect most or all of the profits from tax by claiming their Lifetime Capital Gains Exemption (LCGE). A seller may also find that this sale results in no re-evaluation or re-tilting of their assets. For buyers, a share sale has its advantages, where the buyer can assume non-assignable licenses without having to get any specific consent. While a share sale certainly has many benefits for sellers, it also has disadvantages. For instance, the buyer can expect a lower selling price because the buyer has a higher tax liability and risk level. While a lower selling price may be good for the buyer, risks and liabilities are not. Not to mention that the seller would be making less than they could because of it. The buyer can also expect a disadvantage as they are inheriting all the existing business's liabilities and the tax costs of their assets, limiting depreciation.

In an asset sale, there are a lot more advantages that are specific to the buyer. For example, the buyer can be highly selective with which assets they collect and can control how much of the business's liability they take on. This reduction of potentially unforeseen liabilities reduces the time and effort the buying party must spend on performing their due diligence. Asset sales also come with the advantage of giving the buyer a choice of which employees they want to retain and which they wish to terminate without affecting the company's unemployment rates. Of course, the seller cannot claim their LCGE, and the share sale may cause the seller to receive a double tax hit, in which they are taxed on a corporate and personal level. In addition, the buyer will likely have to renegotiate the business' contracts between customers and suppliers, assets may need to be retitled, and the seller will have to liquidate their unsold assets. The seller will also have to pay any of the buyer's unassumed liabilities and take care of the remaining leases that need to be terminated.


When buying a business, licensing is another consideration that a purchaser needs to consider. Licenses can be treated differently depending on the nature of your sale. In an asset sale, licenses granted by a third party are untransferable by law. While the buyer can obtain some of the licenses, they still need to go through the process of buying the licenses they can't and attaining third-party consent for any licenses that require it. Fortunately, the buyer is given an adjustment period to obtain new licenses under their name. In a share sale, all the company's assets are sold. That includes the company's licenses. This limits the amount of effort the buyer must put in regarding licenses. However, it is essential to note that some government licenses may be unassignable, and the buyer would still be required to purchase a new license. Regardless, the seller will require consent from the third party that provides the licenses to sell them. It's imperative to note that all licenses are different, and they are all affected differently by selling a business. For specific information about the business, you're looking to buy or sell and its licenses, it's a good idea to seek legal guidance and advice.


As a buyer, it may seem favourable to purchase a franchise. It is certainly an easier alternative to buying an existing business. While owning a franchise gives you less control of your business, you get more guidance for the entire operation. As a franchisee, you receive the franchises logo, business model, and name, giving you a head start in the marketing and brand recognition department. While these things can be seen as advantages, it comes with strict rules set out by the franchisor that must be adhered to. There are two common forms of franchising; product/name franchising and business format franchising. In product/name franchising the franchisor sells the name and trademark to the franchisee. The franchisor then produces and supplies their products to the franchisee who sells them to consumers. In business format franchising, the franchiser and franchisee have an ongoing relationship. The franchisor offers services like site selection, training, product supply, marketing plans, and even helps in getting funding. Adversely, when buying and owning an existing business, you will have more control of your business but less guidance for your operation.

Due Diligence

Buying or selling a business can be a scary endeavor with a lot of factors and information to consider. As the purchaser of a business, it would be a very good idea to do background research on the person that is buying your business or selling you the business. At Buzaker law firm we offer a variety of different background searches using a variety of databases to ensure that you have all the information you need. We offer the following corporate searches:

  • Corporate profile report

  • Certificate of Status

  • Articles of Amendment (if the Profile report will show they’ve amended)

  • Business Name search

As the buyer, there are some important aspects and factors to consider, as well as a number of different pieces of information regarding the seller of the business you’re looking to buy. The seller will likely have you sign some form of nondisclosure agreement before hand.

You should ask for and research the followings:

  • Lists of customers and suppliers

  • Lists of customers and suppliers

  • List of employees, including a breakdown of salaries and years of service

  • Details of any major contracts necessary for the operation of the business, including the lease of any premises.

  • List of all equipment and assets of the business

  • Any related debts, licenses, and liabilities.

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