There are generally two avenues used to purchase a business. The purchaser can acquire the underlying assets of the business, or purchase the shares of the corporation that owns the assets and operates the business. There are important tax consequences which will be influenced by the chosen structure of the transaction.

We handle complex purchase and sale transactions and undertake searches of the corporate records; security searches under the Personal Property Security Act; intellectual property searches; execution searches; and bankruptcy searches.

The existence of claims and encumbrances against a business will be important factors in considering whether the sale is for assets or shares. There are a host of advantages and consequences associated with the chosen method of acquiring a business. We undertake a critical analysis of sale transactions for businesses in manufacturing, industrial materials, construction, technology and public services among others.

What is an asset transaction?

In an asset transaction, a purchaser is able to select only the assets that it wishes to acquire and accompanying liabilities it is willing to assume. There is important tax treatment of the assets and liabilities the purchaser intends to acquire.

What is a share acquisition transaction?

In these types of transaction, the purchaser, by virtue of acquiring the shares of the corporation, acquires the corporation itself. In this scenario, the purchaser will assume all liabilities and underlying assets of the business, both known and unknown.

There are important tax consequences related to share transaction. We assist businesses with executing these types of transactions.

What are some of the influences of income tax on the purchase and sale of a business?

Generally, for various income tax reasons, vendors prefer to dispose of shares and purchasers to acquire assets. Vendors are conscious with the tax consequences arising in the year from the sale of the business. In contrast, purchasers are concerned with the tax consequences associated in the years following ahead where deductions may be realized.

We assist business owners and prospective business people with various complex purchase and sale transactions. Buying or selling a business is a very complex process, with numerous income tax options available.

We are business people. Our business, is helping your business.

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