Kay Law’s chief concern is the well-being of its clients and staff members. As such, we are supporting public health recommendations to reduce the spread of COVID-19.

We have implemented a “social distancing” policy, which entails limiting person-to-person contact. We have adopted phone conference calls and video meetings until this unprecedented threat to pubic health subsides. This policy is in effect from March 17, 2020 until April 6, 2020, when we will re-assess the situation.

If you are attempting to deliver or pick-up any item from our office, please see the instruction sheet posted on our outside door or please phone us at 519-579-1220 and we will instruct you.

We are fully committed to providing legal services to our clients during this period. Please phone or email us. (519-579-1220 or reception@kaylaw.ca)

We appreciate your patience and understanding as we take time to adopt policies that keep everyone safe and healthy.

Thank you.
Yours very truly,
Kay Law Professional Corporation

Thursday, November 14, 2019

Kay Law Blog 3 - Selling Your Company (Asset vs Share Transactions)

Selling Your Company
(Asset vs Share Transactions)

When the time comes to sell your business, there are two main ways to structures the deal: (1); an asset sale or (2) a share sale. Each comes with its own pros and cons for both the buyer and seller. Below we have outlined the major differences between the two as well as some of the pros and cons of each

An asset sale/purchase is a transaction where the buyer purchases the operating assets of the business. Assets purchased include tangible (fixtures, furniture, equipment, inventory, leasehold improvements, etc.) as well as intangible (brand-name, client list, contracts, website, phone numbers, etc.). The sellers company continues to exist post closing, deposits the money received from the sale into its bank account and removes the sold assets from its balance sheet. An asset sale often requires dealing with many ancillary items such as employment termination and rehiring, lease assignment with landlord consent, contract transferability, creditor payouts, etc. The main focus in an asset sale/purchase is ensuring that the assets being transferred are free and clear of any liens and are truly owned by the selling party. A buyer often prefers an asset sale because the risk to the buyer is much lower than in a share purchase/sale. A seller often would prefer a share sale for the reasons discussed directly below.

A share sale entails selling the entire business, including all assets and liabilities. Due to this, due diligence and the representations and warranties contained in the purchase agreement must be extensive. A seller will often prefer a share sale due to the lifetime capital gains exemption, which provides that the first $850,000 of profit made on a share sale is exempt from income tax.

Every business transaction is different and selecting an asset sale versus a share sale is an important consideration for both buyers and sellers. At Kay Law we have extensive experience negotiating and closing all types of business transactions. Contact us today for your consultation.

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