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Things to know

  • The two most common structures used to acquire a business is a share purchase or asset purchase. In a share purchase, the entity carrying on the existing business is purchased; all assets and liabilities will be acquired. In an asset purchase, a buyer can pick and choose what assets it would like to acquire, and which liabilities to assume. Other more complex structures are also sometimes used
  • Governmental approvals may be needed under the Investment Canada Act and/or the Competition Act, depending on the purchase price and size of the business being acquired.  Also, companies operating in certain regulated industries (such as telecommunications) may be subject to foreign ownership restrictions or require governmental approval

Things to do


  • Determine the optimal structure for acquiring the business. In addition to deciding between a share purchase and asset purchase, consider whether a new Canadian subsidiary should be established to complete the acquisition. Tax considerations are an important component of the analysis, and a tax advisor should be consulted

Due Diligence 

  • Investigate the business to be acquired. This will normally include a review of all important contracts, confirming ownership of key assets, assessing the liabilities of the business, and obtaining lien search results

Assess Regulatory Implications 

  • Determine if the transaction will give rise to a requirement for approvals under the Investment Canada Act and/or the Competition Act.  Determine whether the business being acquired is in a regulated industry that restricts foreign ownership

Document the Purchase 

  • Engage counsel to assist in negotiating a legally binding purchase agreement
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