As a rule, the purchaser consults his notary before making business an offer to buy, with a buying price in mind and a strong need to protect himself.

The offer to purchase is well known in the context of the acquisition of houses, secondary residences, or condominiums with the help of M&A advisory. You should know that it is also at the heart of any commercial or corporate transaction. Following the letter of intent, which provides a framework for the expectations of the parties by providing the main parameters of the contemplated transaction, the offer to purchase will allow the buyer to carry out a

due diligence with a view to concluding the transaction. The offer is in a way the keystone of the process. What are the fundamental elements of the offer to purchase and what are the traps that lie in wait for the buyer?


There are two types of takeover bids: the sale of shares and the sale of assets (formerly known as a “goodwill sale”).

The seller generally wishes to sell his shares to benefit from the capital gains exemption of $750,000 (a lifetime maximum). It ought to be stated that this exclusion is not automatic.

For his part, the buyer rather wishes to buy the assets to limit his responsibility for the tax and legal history of the company.

The seller always has an interest in disclosing all relevant information about his company, to avoid possible claims or lawsuits for fraud.


Due diligence remains an essential protection step for any buyer. You must check, among other things: employment contracts, insurance contracts, leases, the company’s tax history, previous payments of GST, QST, CSST and source deductions (DAS), seniority of employees with respect to the Act respecting labor standards, as well as any other element necessary to minimize unforeseen events. As a rule, the purchaser asks his lawyer before making an offer to buy, with a buying price in mind and a strong wish to protect himself. In the past, the legislator had provided for strict rules on the “bulk sale” type transaction.


❚ Be the owner of the shares of the company for at least 2 years

❚ Within the 2 years preceding the transaction. More than 50% of the fair market value (FMV) of the assets must have been used in the active operation of the business

❚ At the time of the transaction. 90% of the FMV of the assets must be used in the active operation of the business

The legislator quickly realized that these rules had the effect of creating serious constraints. On the sale of businesses in San Diego. Consequently, on June 13, 2002. The National Assembly adopted Bill 50 (2002, chapter 19). Entitled An Act to amend the Civil Code and other legislative provisions. Among the amendments adopted.

Although today the rules are more flexible, it is still necessary. To be very vigilant in the acquisition of a company because the accumulation of civil. Tax and legal obligations can, for an uninformed buyer, cause a lot of trouble. Several weeks, months and even years after the transaction. Your notary is a leading advisor in the purchase of a business. Consult the M&A advisor.

The offer to buy is the real foundation of the business. It represents both a sales contract and a purchase contract. It creates binding obligations between the parties.


The subject of the transaction (sale of shares or sale of assets)

The purchase price (with a breakdown of the purchase price for the sale of assets to meet tax obligations)

Terms of payment (balance of sale price, down payment, interest rate, penalties, prepayment)

Conditions (due diligence, financing, inspection, zoning, permits)

A non-disclosure clause

A clause relating to intellectual property

Specific conditions (food permit, liquor permit, environmental permits, authorizations)

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