Business Purchase Due Diligence in Ontario

Who should review the business?

Agree with your advisers who will lead each part of the review. An accountant can examine the financial and tax evidence. A lawyer can examine legal rights and obligations. The buyer also needs to investigate operations and what will be required to run the business after handover. BDC’s due diligence overview describes these complementary areas.

Have counsel review the actual investigation conditions and deadlines in your proposed documents. Identify missing access early, and raise any need for more time before a deadline passes. The steps and available remedies depend on the agreement.

What records should you request?

Use this as an agenda for tailoring a request list with your team:

• Ownership: who owns the shares or assets being offered?
• Finances: what supports reported earnings, debt and working capital?
• Premises: what does the lease say about the proposed transaction?
• Contracts: which customer, supplier or financing terms require attention?
• People: what employee and contractor arrangements are documented?
• Business assets: who controls the name, equipment, software and intellectual property?
• Disputes and approvals: what claims, licences or regulatory matters need review?

The BDC due diligence checklist provides a broader starting point. Add questions specific to the industry and structure rather than treating a generic list as clearance to proceed.

Will the things you need actually transfer?

Build a list of the assets, rights and relationships the business depends on. For each, ask who owns it, how it would be transferred and what consent or continued access is required. A key relationship may depend on the current owner even when the records appear complete.

For an asset purchase, compare this list with the assets and exclusions in the draft agreement. For a share purchase, have counsel examine the corporation’s history and relevant contract terms. BDC’s liability guide explains why structure changes the investigation. Avoid assuming an asset deal removes every exposure or that a share deal eliminates every consent question.

How should you deal with an unresolved finding?

Record the finding, the available evidence and the decision it requires. An unsigned customer agreement, for example, calls for a different discussion from a missing equipment invoice. Ask the relevant adviser how the issue could affect the commercial assumptions or the proposed documents.

Possible discussion points include requesting more information, changing a term, obtaining a consent or deciding whether the transaction still fits your objectives. The appropriate response belongs to the parties and their advisers. BDC explains that investigation can change a buyer’s view of the deal; it is not simply an exercise in collecting files.

What should be confirmed before closing?

Ask counsel to connect unresolved items with the closing checklist. Identify who is responsible for each approval, payment, signed document and delivery of records, and how completion will be confirmed. Keep a separate list for promises that continue after closing.

Plan access to the premises and systems, employee communication and the seller’s agreed handover support. Read PCBO’s buyer’s lawyer guide for preparing an initial meeting, or the seller’s lawyer guide for organizing the other side of the process.

Discuss legal due diligence with Lamba Law

Lamba Law identifies legal due diligence review and coordination as part of its Ontario business purchase and sale services. Contact the Mississauga firm at 437-447-5599 to discuss the target business, transaction structure, available records and proposed closing date.

Confirm what the legal engagement includes and which reviews require another adviser. The Lamba Law PCBO profile links its public contact information and service listings. Bring a summary of unanswered questions so the firm can assess the proposed legal work.