Whether you're looking to become a partner in an established business or you’ve decided to purchase a franchise or acquire an independent business, one of the key ways to ensure the process is a success, is to rely on advice from your business lawyer.
An experienced business lawyer will guide you through the process of due diligence, drafting the agreement of purchase and sale and will advise you on tax strategies in regards to the sale and your new business.
The importance of due diligence
With any business purchase, an extensive review and analysis of all detailed information in relation to the business is imperative. No detail should be unturned and the seller should provide all relevant information on the company's structure, finances, physical assets, employees, permits, licenses, taxes, products and services, customers, threatened litigation, insurance, media, and contracted professionals. Understanding this information and establishing your right to conduct due diligence will position you in good standing for negotiating your purchase agreement and ensuring the purchase will have positive outcomes.
Agreement of Purchase and Sale
Once you and the seller have worked through negotiations and decided on a purchase price, you should hire an experienced lawyer to draft an agreement of purchase and sale contract. will be outlined in this agreement. This legal contract will set out all issues in relation to the purchase including price, considerations, the purchase structure and the assets involved in the acquisition.
Dependent on the business structure, you have different purchase options. For instance, if you have chosen to purchase a corporation, you will have the option to purchase both assets and shares or just share or just assets. The liabilities you take on will be dependent on how and what you acquire.
Tax considerations when buying a business
There are a number of tax implications associated with purchasing a business, they depend on what parts of the business you are purchasing, assets or shares and how you structure your purchase. All relevant tax considerations should be reviewed and evaluated with the assistance of your business lawyer before you make the decision to acquire the business. There are strategies that can be applied to optimize the purchase agreement for taxation purposes.
Choosing a Niagara business lawyer
For advice on buying a business in Ontario, consult with one of the business lawyers of Chown Cairns Law firm. To connect with a lawyer click the button below.