First decide what is actually being purchased
A business acquisition is often structured as an asset purchase or a share purchase. The distinction can affect liabilities, contracts, employees, tax treatment, licences and the documents required at closing. Do not treat the purchase price as the only economic term.
Corporate and ownership checks
For a B.C. company, registry records can help confirm basic corporate information. The province allows users to request business and organization records, including business summaries, filings and Certificates of Good Standing where available. Corporate searches are only one part of due diligence, but they can identify discrepancies that need explanation.
Financial and tax due diligence
Review financial statements, tax returns, bank information, accounts receivable and payable, major expenses and normalization adjustments used to support the seller's earnings claim. Understand working-capital needs and whether the transaction requires adjustments at closing.
B.C.'s current guidance for buying and selling a business states that a purchaser should ensure a provincial sales tax clearance certificate is issued before buying a business or relevant business assets where the rules apply. Tax advice may also be required for income tax, GST and transaction structure.
Contracts, customers and suppliers
Identify the agreements that make the business valuable. Ask whether they can be assigned, whether consent is needed and whether a change of control triggers termination. A purchase can disappoint quickly if a key customer contract, franchise agreement, permit or supplier arrangement does not transfer as expected.
The premises may be as important as the business
If the company leases its location, review the lease before closing. A buyer may need the landlord's consent to an assignment or a new lease. Rent escalation, demolition clauses, use restrictions, personal guarantees and renewal options can materially alter the economics of the acquisition. Our commercial lease guide explains the lease issues in more detail.
Employees and operational liabilities
Identify employees, contractors, accrued vacation, benefit commitments, workplace claims and key-person dependencies. Employment obligations can be affected by transaction structure and the way employees are transitioned. Specialized employment advice may be appropriate before promises are made to staff.
Build a closing checklist
- Purchase agreement and all schedules.
- Corporate and ownership searches.
- Financial, tax and banking records.
- Material customer, supplier and licensing contracts.
- Lease and landlord consent documents.
- Employee and contractor information.
- Security interests, financing and payout requirements.
- Intellectual-property and domain-name ownership.
- Required tax clearances and closing adjustments.
Related Burnaby business-law guides
See business law for contracts and company governance, shareholder disputes for owner conflicts, and starting a business when comparing acquisition with building a new operation.
Primary source: Buying and selling a business in B.C. (Province of British Columbia).