How long after signing an Agreement of Purchase and Sale does closing occur?

Most business transactions close 30–60 days after signing, giving time to satisfy conditions and prepare closing documents.

How does an Agreement become firm?

An Agreement becomes firm once all conditions — such as financing, lease assignment, and due diligence — are fully satisfied.

What conditions are typically included in a business purchase agreement?

Common conditions include: Assignment of lease Financing approval Review of financial statements Assignment of important contracts Regulatory or zoning compliance

How many days after signing an Agreement of Purchase and Sale should the closing date be?

The closing date usually occurs 30 to 60 days after the Agreement of Purchase and Sale is signed but this varies depending on the parties.

What can be done to make a transaction firm after the Agreement of Purchase and Sale is signed?

While most conditions are usually in favour of the purchaser, a vendor can help satisfy certain conditions by being responsive in providing due diligence material and notifying the landlord ahead of time.

What are some common conditions included in Agreements of Purchase and Sale?

Conditions in an Agreement of Purchase and Sale depends on the nature of the transaction. However, common conditions in favour of the purchaser includes obtaining satisfactory financing, due diligence of the business, which includes reviewing both financial and legal documents, and obtaining the landlord’s consent to the transaction.

How many days is the conditional period for an Agreement of Purchase and Sale?

The conditional period is typically anywhere from 5 to 20 days after the signing of the Agreement.

Is the transaction finalized once the conditional period is over?

No. Once conditions have been waived, the parties will exchange closing documents to effect the sale of assets or shares from the vendor to the purchaser. This typically happens shortly after the conditional period.

The Two-Step Process to Buying or Selling a Business

The Two-Step Process to Buying a Business or Selling a Business

Buying or selling a business is a complex legal transaction that involves preparing an agreement, satisfying conditions, and drafting final closing documents. These documents often require legal review and may also involve government filings or obtaining specific business permits and licenses.

Below is a breakdown of the two essential steps required to legally buy or sell a business in Ontario.

Step One: Agreement of Purchase and Sale

The first step in the process is negotiating and signing an Agreement of Purchase and Sale. Depending on the nature of the transaction, this agreement may take one of two forms:

Asset Purchase Agreement – where only business assets are being transferred
Share Purchase Agreement – where the shares of the corporation itself are being sold

In many cases, real estate agents, brokers, or the parties themselves may prepare the agreement. However, most buyers and sellers engage a lawyer to negotiate terms, draft a Letter of Intent (LOI) where applicable, and structure the formal agreement. The lawyer commonly manages communication, performs negotiations, and prepares the official documents.

The Closing Date

Every Agreement of Purchase and Sale includes a closing date — the official day the transaction becomes legally effective. This is usually 30 to 90 days after signing. Until this date, the parties work together to satisfy the conditions of the deal and prepare the closing documentation. In this way, a business purchase or sale behaves similarly to a real estate transaction.

Once the Agreement is signed, the transaction moves toward closing.

Step Two: Conditions and Closing Documents

After the Agreement is signed, the buyer and seller must work toward completing two major tasks:

Satisfying all conditions of the agreement
Preparing the closing documents required to transfer the business

(A) Satisfying the Conditions

Most business purchase and sale agreements include conditions that must be fulfilled before the transaction becomes firm. Some common conditions include:

Assignment of the business lease
Obtaining financing
Assignment of key trade, vendor, distributor, or customer contracts
Review of financial statements
Confirmation of zoning compliance
Obtaining government permits or status certificates

The conditional period is typically 5 to 20 days after signing. During this period, the lawyer is involved in tasks such as:

Contacting the landlord for lease assignment
Requesting financial statements from the accountant
Drafting assignment and assumption agreements
Reviewing zoning to ensure the business is compliant
Obtaining status or permit certificates

The deal only becomes firm once these conditions are met.

(B) Preparing the Closing Documents

Once conditions are satisfied, the parties move to prepare the legal documents required to complete the transaction. It is important to note that the Agreement of Purchase and Sale does not transfer ownership on its own; transfer documents must be executed on the closing date.

Typical documents required to complete a share sale may include:

Authorizing corporate resolutions
Consent to transfer of shares
Endorsed share certificates and issuance of new certificates
Updated corporate ledgers
Resignations of outgoing directors and officers
Election of new directors and officers
Indemnity agreements
Releases
Solicitor’s opinion
Employee indemnity documentation
Residency statutory declarations
Certificates of Status and Incumbency
PPSA registrations and/or discharges
Certificate of Status for the corporation
Non-competition agreement
Direction regarding funds
Statement of Adjustments
Receipt for purchase price
Form 1 Notice of Change

These documents ensure that share ownership is properly transferred and corporate records fully reflect the change.

Common Closing Documents in an Asset Sale

In an asset sale, common closing documents may include:

Resolutions of the Vendor and Purchaser
Statutory declarations of residency
Certificates of Status and Incumbency
Promissory Note
General Security Agreement
Assignment of leases and contracts
WSIB Purchase Certificate
CRA and RST clearance certificates
Section 167(1) GST/HST joint election
Assignment of trade name
Assignment of telephone number and digital assets such as website and social media accounts
Non-competition agreement
Bill of Sale
Statement of Adjustments
Receipt

Other documents may relate to employee termination or hiring, vehicle ownership, regulatory compliance, and undertakings related to debt payoff.

Considering Buying or Selling a Business?

If you are preparing to buy or sell a business, the process requires legal documentation, due diligence, and careful management of deadlines. Speaking with an experienced corporate lawyer ensures the transaction is completed smoothly and legally. Kalfa Law Firm offers no-charge 20-minute consultations, where we can review the agreements, conditions, consents, licenses, and filings required for your business purchase or sale. Book your consultation.

FAQs

-Shira Kalfa, BA, JD, Partner and Founder

Shira Kalfa is the founding partner of Kalfa Law Firm. Shira’s practice is focused in corporate-commercial and tax law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law. Shira graduated from York University achieving the highest academic accolade of Summa Cum Laude in 2012. She graduated from Western Law in 2015, with a specialization in business law. Shira is licensed to practice by the Law Society of Ontario. She is also a member of the Ontario Bar Association, the Canadian Tax Foundation, Women’s Law Association of Ontario, and the Toronto Jewish Law Society.

The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.