Buying or selling a business is both a commercial transaction and a tax event. The structure chosen at the beginning can affect the purchase price, after-tax proceeds, financing, liability exposure and the buyer’s tax deductions for years after closing. Barr LLP advises private companies, shareholders, purchasers, vendors and not-for-profit organizations on the tax aspects of mergers, acquisitions and business sales in Alberta. We work with clients and their accounting, finance and corporate advisors from the planning stage through closing. Early involvement matters because key tax terms are often set in the letter of intent.
Share sales and asset sales:
- Whether the buyer acquires shares or selected assets is one of the first questions in any acquisition.
- A vendor may prefer a share sale for a cleaner exit and possible access to the lifetime capital gains exemption.
- A purchaser may prefer an asset transaction to choose which assets and liabilities to acquire and to obtain a new tax cost for certain assets.
- We analyze the material differences, including goodwill, depreciable property, inventory, real estate, shareholder loans, earnouts and transaction costs, along with sales tax, payroll and withholding obligations.
Tax due diligence and deal terms:
- Our review can address corporate tax compliance, payroll and GST/HST, related-party transactions, tax attributes, prior reorganizations, shareholder benefits, contractor classification, and outstanding CRA reviews or disputes.
- Findings can inform price adjustments, holdbacks, indemnities, representations and warranties, escrow arrangements and closing conditions.
- Clear drafting matters. A tax indemnity is only useful if it addresses the identified risk and works with the rest of the purchase agreement.
Structuring the transaction:
- We advise on tax-deferred rollovers, corporate reorganizations, amalgamations and post-closing integration.
- We coordinate with the corporate lawyers responsible for the purchase agreement and closing documents so the tax plan and legal implementation match.
- For not-for-profit organizations, we help identify considerations specific to charitable registration, governance approvals and restrictions on the use of property.
A successful transaction is measured by what remains after closing: a workable ownership structure, understood tax obligations and no avoidable surprises. If you are considering buying, selling or combining a business, Barr LLP can provide tax advice at the stage when it has the greatest value.
