Buying a Business in Ontario

Yes, and for most buyers of small and mid-sized businesses, buying assets is the more common structure. It lets you choose exactly which assets and liabilities come with you, and it generally gives you a cleaner starting point than inheriting a corporation's full history.

In most cases, yes, and before the purchase agreement is signed, not after. Buying through a newly incorporated company gives you liability protection and tax planning options that aren't available if you buy personally, and it's far simpler to set up before closing than to unwind afterward.

It happens more often than buyers expect. A vendor take back is a loan from the seller for part of the purchase price, secured against the business, and it can bridge the gap between what a bank will lend and what the deal actually needs. It also tells you something about how confident the seller is in the business going forward.

Most deals move from LOI to close in two to four months. Straightforward asset deals with clean financials move faster, while deals involving real property, multiple shareholders, or complicated financing tend to take longer.

Yes. An LOI sets the framework for the entire deal, including price, structure, and exclusivity, and once it's signed, you've usually given up your ability to negotiate with other sellers. A short review before signing catches issues that are far harder to fix once diligence is underway.

Due diligence is the investigation phase, where you and your advisors verify the financials, contracts, and legal standing of the business. Negotiating the purchase agreement is where those findings get translated into contract terms, like price adjustments, representations, and indemnities, that protect you if something turns out to be wrong.

The buyer typically pays for their own due diligence, covering legal, accounting, and any specialized reviews like environmental or IT. It's a real cost of buying a business, but it's also where problems get caught before you own them instead of after.

A working capital adjustment true's up the purchase price based on the actual level of working capital, cash, receivables, and inventory less payables, at closing compared to an agreed target. It protects buyers from inheriting a business that's been stripped of cash or inventory right before the sale, and protects sellers from being shortchanged if working capital is higher than expected.

Usually yes, but the cost of walking away depends entirely on how the LOI was drafted. Most LOIs are non-binding on price and structure but binding on exclusivity and confidentiality, so read the fine print before you sign, since exiting cleanly is much easier when the exit terms were built in from the start.

Focus on the transition items the purchase agreement locked in, like employee communications, customer and supplier notices, and any post-closing obligations to the seller. The first 90 days set the tone for how smoothly the business runs under new ownership, and most of the groundwork for that transition should already be mapped out before you close.