How to buy a business in Canada
The purchase of an owner operated Canadian business in the order it happens, from writing down what you want to the months after closing. The rules a buyer meets on the way are marked where they apply.
Buying a business in Canada starts with written criteria and a search through brokers and off market advisors. After an NDA, you review the business and value it on adjusted earnings. A letter of intent then gives you 45 to 90 days of exclusivity for financing and due diligence. Closing follows, with the seller staying on for a few months.
Write down what you are buying
Buyers who close usually start with a written brief of the business they want. Advisors ask for it early, and it saves weeks on companies outside your range.
Industry and region come first. Size follows, because it sets the price and the lenders who will look at the deal. It also decides how much of the daily work lands on you.
Decide your role as well. If you will run the business yourself, you are looking for an owner’s job to step into. A buyer who plans to hire a manager needs a team already in place, and pays for one.
Where businesses for sale are found
Business brokers list many owner operated companies publicly, usually with a short description and an asking price. Online marketplaces carry the same kind of advertisement at a larger scale.
Many sales happen off market. Owners who want privacy have their advisors approach suitable buyers one at a time, with an anonymous profile. Those businesses reach the buyers an advisor already knows.
InvestDeal runs its sales this way. A buyer registers a mandate of six fields, from industry and geography through to deal size and ownership structure, and receives an email when a matching business enters the platform.
Joining is free for buyers, since the firm represents owners and is paid by them. Businesses from its partner network are also open to browse, before registering, on the off market listings, from $500,000 up.
The first look, under NDA
The first thing you see is an anonymous profile. It gives the industry and region, with revenue and earnings shown as ranges. If it fits, you sign a non-disclosure agreement and receive the name.
The NDA binds you to keep the sale confidential and to leave the owner’s staff and customers alone. In return you get the confidential information memorandum, or CIM, the package of financial and operating detail prepared for buyers.
| Stage on InvestDeal | What the buyer sees |
|---|---|
| Anonymous profile | Industry, region, financial ranges and a summary |
| NDA and CIM | The company name and the information package |
| Letter of intent | Initial terms, agreed before the data room opens |
| Data room | The full documents for due diligence |
Read the CIM for the risks the price has to carry. Start with how much revenue depends on one customer. Then ask how much of the business lives in the owner’s head, and how much of its revenue repeats each year.
What the business is worth to you
Owner operated businesses in Canada are priced as a multiple of adjusted earnings, or SDE. Companies run by a management team are priced on EBITDA, and the difference between the two changes which multiples apply.
Rebuild the earnings yourself from the statements and tax returns. Every add back the seller claims is a dollar the multiple is applied to, so test each one against records. How to value a business sets out the method.
Then run the price through your own financing. The earnings have to pay you a salary and cover the loan payments, with room left for a weak year. For a buyer, the price that matters is the one the business can carry.
The letter of intent, and the money behind it
A letter of intent sets out the price and how it will be paid. It also names the conditions and the timetable. Most of its terms are statements of intention, while the exclusivity clause binds.
Exclusivity is what the letter buys you. For typically 45 to 90 days the seller talks to you alone, and your diligence and financing have to fit inside that period. Reading a letter of intent goes through it clause by clause.
Acquisitions of this size usually draw on several sources. A senior lender such as a bank or BDC lends against the cash flow and the assets. The seller often carries part of the price as a vendor note, and you put in equity of your own.
Talk to lenders before you sign, since their timetable becomes yours. Financing a business acquisition in Canada covers each source.
Due diligence
Diligence checks what the CIM claimed. Financial statements are tested against bank deposits and tax filings. Your lawyer reads the contracts for change of control clauses, and the lease for the landlord’s consent to a new owner.
Six to twelve weeks is typical. Each finding ends up either in the price or in the protections of the purchase agreement, so write them down as you go. The due diligence checklist lists what buyers usually ask for.
Measure working capital during this stage too. The purchase agreement sets a target level, and the adjustment against it after closing moves money in one direction or the other.
Shares or assets, from the buyer’s side
In a share purchase you buy the corporation with its history, including tax years the CRA can still reassess. In an asset purchase you choose the assets and the liabilities you take on, and each asset comes in at the price you paid for it.
| Share purchase | Asset purchase | |
|---|---|---|
| What you acquire | The corporation and its whole history | The assets and liabilities named in the agreement |
| Tax cost of equipment | The corporation’s existing, depreciated values | The price allocated to it |
| GST/HST | Exempt, as a financial service | Payable on taxable assets, or removed by a section 167 election |
| Contracts and leases | Stay with the corporation, subject to change of control clauses | Assigned one by one, often with consent |
| Seller’s usual preference | Preferred, for the capital gains exemption | Resisted, and priced accordingly |
Sellers lean towards shares because only a share sale can use the lifetime capital gains exemption. A buyer asked to take shares commonly asks for a lower price or a larger holdback. Share sale or asset sale covers both sides.
Draft rules released on September 15, 2026 favour the asset buyer further. An arm’s length buyer of used equipment can deduct its full cost in the first year, as the Mega Deduction in an asset sale explains. Finance’s figures by sector show the largest effect in transportation and in agriculture and fishing.
GST/HST follows the structure. Under the Excise Tax Act a transfer of shares is a financial service, and financial services are exempt. In an asset purchase, tax applies to most of what changes hands.
Section 167 of the Act lets buyer and seller jointly elect to remove that tax, provided the buyer acquires all or substantially all of the property needed to carry on the business. The CRA generally reads that as 90 percent or more.
Where the seller is a GST/HST registrant, the buyer must be one too. The buyer files Form GST44 by the due date of its return for the first period in which the tax would have been payable. Services the seller will perform stay taxable, as do leases and licences.
Closing, and the months after
The lawyers turn the letter into a purchase agreement. On closing day the lender funds the loan and the seller receives the price. Signing authority over the bank accounts passes to you the same day.
Part of the price is often held back to cover claims under the seller’s representations. The working capital adjustment is usually settled 60 to 90 days after closing.
The transition is written into the agreement. The seller typically stays on, paid, for a few months, introducing you to staff and to the customers who matter most. Staff are usually told on the day or shortly before, with both of you in the room.
Buyers who are Canadian citizens or permanent residents fall outside the Investment Canada Act, as do companies they control.
A non-Canadian who acquires control of a Canadian business files a notification with ISED, at any point up to 30 days after closing.
Buying all or substantially all of a business’s assets counts as acquiring control. For a corporation, one third or more of the voting shares is presumed to be control.
A full net benefit review starts far higher. For private sector investors from WTO members the 2026 threshold is $1.452 billion in enterprise value. A national security review can apply to a foreign investment of any size.
| After the letter is signed | Typical time |
|---|---|
| Exclusivity | 45 to 90 days |
| Due diligence | 6 to 12 weeks |
| Closing documents | 3 to 5 weeks |
| Working capital adjustment | 60 to 90 days after closing |
| Investment Canada notification, non-Canadian buyers | Up to 30 days after closing |
| Seller’s transition period | Usually a few months |
The seller’s side of the same process is in How to sell a business in Canada.
Questions owners ask
- How long does it take to buy a business in Canada?
- Once a letter of intent is signed, closing typically follows in about two to four months: six to twelve weeks of due diligence, then three to five weeks of closing documents. The search before the letter varies most, since it depends on how many businesses match your criteria.
- Do non-Canadians need approval to buy a Canadian business?
- A non-Canadian who acquires control of a Canadian business files a notification under the Investment Canada Act, at any time up to 30 days after closing. A full net benefit review applies only above much higher thresholds, which in 2026 start at $1.452 billion in enterprise value for private sector investors from WTO members.
- Do you pay GST/HST when you buy a business?
- A share purchase is exempt, because a transfer of shares is a financial service. In an asset purchase, tax applies to most assets. Buyer and seller can jointly elect under section 167 of the Excise Tax Act to remove it, when the buyer acquires all or substantially all of the property needed to run the business.