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Buying/Selling a Dental Practice: Asset Purchases

By February 17, 2011June 27th, 2023Buying a Practice, Corporate, Selling A Practice

I’m going to shift gears here now and start talking about asset purchases instead of share purchases.  Here’s the situation: you’re a doctor, dentist, pharmacist, physiotherapist, chiropractor, etc. and you’re looking to buy the assets of an existing practice.  You don’t want to simply buy the shares because there may be hidden liabilities or because you want a clean/fresh start.  So where to begin?

It’s all about Conveyancing!

Well, in an asset purchase, unlike in a share transfer, you’ll need to prepare a lot of conveyancing documents.  This could, for example, include a bill of sale for inventory, an assignment of lease/trademark/employee/license agreement(s), an agreement of purchase and sale for real property, etc.  You may also need third-party authorizations and consents for these transfers.

Tax Implications?

There may be tax implications on the transfer of the assets.  For example, if both parties to the asset purchase/sale agree, they can jointly elect not to pay any GST under the Excise Tax Act on the transfer of all or substantially all of the assets used by the business.  You should contact a lawyer or an accountant for more information on this.  Furthermore, if you’re acquiring certain depreciable capital property, you’ll want to know what your cost base is and what you can deduct (as an expense) as a capital cost allowance each year.

Lawyer/Agent Fees

There may also be additional costs that appear in the form of lawyer or agent commissions and registration fees (e.g. assigning a trademark, assigning a lease agreement, transferring real estate).

What’s the Deal Really About?

When you’re looking to buy assets, your primary concern is that the assets belong to the seller (i.e. the seller has clear and free title to them) and that the seller is capable of transferring the assets (i.e. they have all power, capacity, authority, consent, etc. to do so).   This will come out in representations, warranties, and indemnities agreed to by the seller, as well as documentary review title searches on the part of the purchaser’s lawyer.


Simply because you’re buying assets doesn’t necessarily mean that you won’t become the DEEMED employer of the old business’ employees!   The Ontario Employment Standards Act, 2000 says for example:

9. (1) If an employer sells a business or a part of a business and the purchaser employs an employee of the seller, the employment of the employee shall be deemed not to have been terminated or severed for the purposes of this Act and his or her employment with the seller shall be deemed to have been employment with the purchaser for the purpose of any subsequent calculation of the employee’s length or period of employment.

So if the assets of a dental practice are sold and the purchaser employs a dental hygienist or receptionist of that old business, then that person’s employment is deemed to have continued under the purchaser.  Unless otherwise agreed to by the purchaser, seller, or employee, this could affect the purchaser when it comes to things like salary, notice periods for termination, bonuses, and severance!


Closing happens at a very specific time on a very specific date. That time and date can surely be changed. But in effect, it’s the time that the transaction occurs. Now, there are generally two types of ways in which the closing is realized. First, everything gets done in one day. There is no interim period from the time the asset purchase agreement is signed to the time of closing. It’s all happening on the same day. So on that day, ALL of the agreements and documents are entered into and delivered, the purchase price is paid, and the purchaser takes possession of the assets. This is referred to as “Same Day Closing“.

Now, not everything is capable of happening all in one shot. There may be delays and time needed to get third-party consents, run certain checks against the vendor and the assets being sold, and review documentation. So what happens is that the parties will sign an asset purchase agreement that contemplates everything closing on a specific date (or as the parties may otherwise agree in writing, for example). After signing, but before closing, the parties will run around and do their diligence, get third-party consents, prepare all of the paperwork, etc. Then, on closing, the parties will meet up, exchange closing documents, and the purchase price will be paid by the purchaser in exchange for taking possession of the assets.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.