December 15th 2023
Purchasing assets from a business in Ontario is a common occurrence for some; however, for those new to the business and who have not completed an asset transaction before, here is some information that may be helpful as a starting point.
Items that are often purchased in an asset transaction include equipment, inventory, real estate, intellectual property, customer lists, or patents (to name a few). First, when purchasing assets, you will want to identify the specific assets that you intend to purchase; this could be any of the above-named assets that a business is selling. Once you can identify the assets, it is important that you assess their value and have a full understanding of what is perfected and attached to the specific assets you are purchasing in the Personal Property Security Act (“PPSA”). This is where a lender would register a security interest in all property the borrower has borrowed or borrowed against.
You would then have Liddiard Law negotiate the terms of the purchase with the seller. This includes the purchase price, payment terms, and conditions or warranties that may apply. It is crucial that you and your lawyer identify the specific items being sold and have a list put together of certain assets, including licenses and permits associated with the assets. If the corporation, for example, offers alcohol, tobacco, or gambling services (such as a convenience store), it would be important for you to have a condition pending the successful retrieval and approval of those licenses. A second commonly used condition applicable to most asset transactions is the assumption of the lease. You will want your lawyer to review the original lease and ensure you are comfortable with the terms, and that the landlord is allowing you to assume the leased space prior to having a firm Agreement of Purchase and Sale.
Following a successful Agreement of Purchase and Sale between yourself and the seller, you would need to have a lawyer close the transaction. This involves completing the necessary searches on the assets, transferring licenses, notifying suppliers, and completing a bill of sale and proof of ownership of the assets, alongside other legal documentation.
On the closing day of the asset transaction, you will want to ensure that the agreed-upon assets are in the condition they were promised, without liens (if applicable), and make sure the assets are reflected in proof of ownership. Liddiard Law would ensure the successful transfer of all assets set out in the Agreement of Purchase and Sale on closing day. Oftentimes, if inventory is 
being purchased, on the day of closing, a counter will count the inventory and provide a price to the purchaser that reflects the exact inventory left on the day of closing. An adjustment on the Statement of Adjustments will reflect this inventory count.
After closing, there will be additional steps such as integrating the assets within your business, transferring licenses, notifying clients/customers of the change in ownership, suppliers, and compliance with insurance related to the business you are in.
Brock A. Buckley, LLB
NCA Candidate, Corporate, Real Estate
Commissioner of Oaths
Office: (905) 374-1617 ext. 304