Purchase and Sale1

Purchase and Sale1 - MOS 2276 ADVANCED CANADIAN BUSINESS...

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MOS 2276 – ADVANCED CANADIAN BUSINESS LAW PURCHASE AND SALE OF A BUSINESS 1. Introduction $ you have identified a biz which is attractive to you $ you have a biz which you would like to sell $ as a purchaser, you do some initial investigation $ then you have some decisions to make - some legal, some biz 2. Letter of Intent $ usually non-binding, but may be binding $ may be binding in only some specific areas (e.g. confidentiality, lock-up, etc.) 3. Searches $ usually commence after letter of intent signed $ against corporation (and vendor if share purchase) $ corporate profile search $ certificate of status $ bankruptcy search $ PPSA search $ Executions Search $ Relevant regulatory authorities (stock exchange, RIBO, etc.) 4. Assets vs. Shares $ first major legal decision – whether to buy/sell assets or shares $ you can acquire some or all of the assets of the biz - make offer to corporation $ or you can acquire shares of the company that owns the biz - make offer to shareholders $ purchasers typically want to buy assets $ advantages of asset purchase: can cherry pick assets, no assumed liabilities, maximize CCA deductions, less due diligence $ disadvantages of asset purchase: must convey each asset, bulk sales act compliance, third party consents required, maybe GST and/or PST $ vendors typically want to sell shares $ advantages of share purchase: capital gains exemption for seller, simplicity, no cherry
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Purchase and Sale1 - MOS 2276 ADVANCED CANADIAN BUSINESS...

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