You are about to sell your business — or acquire one. The price has been negotiated, the parties are in agreement, and yet one fundamental question remains unanswered: are we selling the shares of the company, or its assets? This choice, which may seem technical at first glance, radically transforms the tax and legal consequences of the transaction for both parties. In Laval as throughout Québec, SME owners sometimes discover too late that the structure chosen mattered just as much as the price itself.
Two Ways to Sell a Business — Two Very Different Realities
What Is Transferred in Each Case
In a share sale, the seller transfers their shares in the corporation. The buyer becomes the owner of the company itself — with everything it contains: its contracts, its employees, its assets, but also its debts and its tax history. The corporation continues to exist, unchanged in its legal form.
In an asset sale, it is different: the corporation remains in the hands of the seller, but it transfers to the buyer what it owns — equipment, clientele, inventory, intellectual property, goodwill. The buyer chooses what they wish to acquire, and what they prefer to leave aside.
This distinction — selling the company or selling what it owns — is at the heart of everything else.
On the Seller's Side: Major Tax Considerations
For an entrepreneur who has built their business over many years, the structure of the sale can make a considerable difference from a tax standpoint.
A share sale is generally seen as more advantageous for the seller. Under Canadian income tax legislation, certain sellers may benefit from the lifetime capital gains exemption on the sale of qualifying small business corporation shares — a significant tax advantage that does not apply in an asset sale. The eligibility conditions are specific and must be analyzed by your tax and legal advisors before any decision is made.
An asset sale, for its part, can generate several levels of taxation for the seller, including on the capital gain realized and, in certain cases, on the recapture of depreciation. Me Petrulian will walk you through the details during your consultation, in coordination with your accountant.
On the Buyer's Side: Flexibility or Simplicity?
The buyer, for their part, often has preferences that are the opposite of the seller's — and this is precisely what makes negotiating the structure just as delicate as negotiating the price.
In an asset sale, the buyer acquires assets at their current fair market value, which allows them to depreciate those assets for tax purposes starting from that new base. They may also choose not to assume certain liabilities or ongoing litigation. For many buyers, this is a comfortable position.
In a share sale, the buyer takes on the corporation as a whole — including past tax liabilities, existing contracts, and latent risks. In return, the transaction may be simpler to structure in certain contexts, and certain tax attributes belonging to the corporation (such as loss carryforwards) may prove advantageous depending on the situation.
Negotiating the Structure: Just as Important as the Price
An identical sale price can lead to very different outcomes depending on the structure chosen. This is why sellers and buyers often come to the table with opposing preferences. Negotiating the legal form of the transaction is, in itself, a strategic step — and it must be approached with the support of qualified professionals from the outset.
The Role of the Notary in a Business Transfer in Laval
In a corporate transaction in Québec, the notary plays a role far broader than the mere signing of documents. In accordance with Québec law and the requirements of the Civil Code of Québec, the notary ensures the legal validity of transfer deeds, drafts or reviews purchase agreements, verifies title to the assets being transferred, and coordinates the entire process with the other professionals involved — accountants, tax specialists, and lawyers.
As a corporate notary in Laval, Me Mirabela Petrulian has been supporting entrepreneurs in the region through business transfer transactions since 2007. Her role is to secure each step legally, to protect her clients' interests, and to ensure that the chosen structure is properly documented and executed — in full alignment with the tax strategy adopted by the advisory team.
Consult Groupe Synergie Notaires
Are you considering selling or acquiring a business in the Laval or Montréal area? Before choosing the structure of your transaction, take the time to consult a professional. Me Mirabela Petrulian and the team at Groupe Synergie Notaires are available to guide you through your business transfer in Laval and the surrounding region.
📞 (514) 399-1009 ✉️ info@gsnotaires.com 📍 67, Boulevard Samson, Laval (Sainte-Dorothée), QC H7X 3E6
This article is provided for informational purposes only and does not constitute legal advice. Please consult a notary or qualified advisor for any specific situation.