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In a previous blog post, we outlined some key items to consider when taking part in a share purchase.

In this post, we will go over vital issues to take into account when acquiring interest in a business via an asset purchase

An asset purchase means that you as purchaser either individually or via your corporation are buying an existing asset from another individual or a corporation.

The type of asset(s) being purchased could vary from something as small as a singular piece of machinery equipment to as large as a fully operational business with numerous assets and employees.

Items to look into include but are not limited to whether any items being purchased are pledged as collateral via a PPSA registration for any loans the business/owner may have borrowed; whether the premises on which the business being purchased is tenanted and require you as the Purchaser to takeover an existing lease; whether the business has any existing employees whose employment contracts have to be assumed; whether the business is up to date with all of its necessary tax filings etc.

It is very important to have to carry out very thorough due diligence when entering into such types of transactions as such you may want to make sure that the Asset Purchase Agreement is conditional on certain due diligence including a solicitor review condition.

Please feel free to contact one of our lawyers should you have any questions on this matter! Simply email us info@kormans.ca or call (905) 270-6660!

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Taimoor Qureshi is an Associate Lawyer at Kormans LLP. You can reach Taimoor anytime at tqureshi@kormans.ca.

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