When buying or selling a business there are essentially two types of sales: an asset sale or share sale. The structure of the deal is important to avoid any unwelcome surprises. 
There are 5 main considerations you need to look for: 
1. Liability - With a share sale, all the assets and liabilities are translated to the new shareholders of the company. This means that the seller gets to walk away from any liabilities and the buyer would assume all responsibility for such. i.e. Pending tax returns or tax liabilities. As an Asset sale allows the buyer to essentially pick and choose the pieces of the business that are attractive the liabilities generally remain with the seller. 
2. Employees - In an asset sale, the non-union employees i.e. regular employees will not be taken by the buyer. More commonly, however, the seller will negotiate extended contracts for the employees so that wrongful dismissal claims from employees can be avoided. In a share sale, the targeted company's employees remain employed with the company as only the ownership of the shares are swapping hands. If the buyer chooses to retain or terminate the employees then the buyer will have to pay the severances accordingly. 
3. Complexity - Share sales are less complex than asset sales. An asset sale will require additional documentation of the assets being transferred over at fair market value and non-arm's length. In contrast, under a share sale the assets of the target company will remain within the company and only the shares and any shareholder loans would need to be accounted for. 

4. Taxation - Share sale - The proceeds of a share sale above the seller's adjusted cost base are taxed as Capital gains (50%) to be included as income. However, if certain conditions are met such as the business being a active business then the $824,176 lifetime capital gains exemption( 2016) can be used to avoid the capital gains taxation for qualified small business corporations. The capital gains taxation can be further reduced by using intercompany dividend transfer strategies. 
A buyer might prefer to do a share transaction to take advantage of the non-capital tax loss carry forwards (business losses) can be applied against future income. A share purchase also allows the buyer to avoid paying sales and property taxes on purchased assets. These taxes can be significant when combining the sales tax and the property taxes which can be avoided by implementing the right strategies. 

5. Taxation - Asset Sale - A seller will usually want the purchase price to be optimal to minimize the recapture of capital cost allowance previously deducted on depreciating assets. If the price paid for a real estate building was $500,000 the historical price recorded would have been that on the balance sheet. However, the fair market value of such a building in downtown Toronto today could fetch $1.5 million which would be hit with a 50% capital gain tax leading to a hefty tax bill. 
A buyer, however, will like to allocate as much of the purchase price as possible to the depreciating property so that they can take advantage of the higher tax depreciation expenses to offset income. The valuation of these transactions will be restricted by the fair market value of the depreciating property. The buyer will be hit with the property transfer tax on real property such as buildings and equipment and the sales tax on equipment or inventory. 
As you can imagine the complexities behind making such a business transaction requires a deep understanding of the tax act. It's always a good idea to get a second opinion and to structure the business deal so that it benefits both parties. Get a Capex CPA to help you keep more money in your pocket! 

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- Written by: Jag Bath