Questions to Ask Before Buying a Business in Canada

Before buying a business, ask how it earns revenue, what the proposed sale includes, who keeps it running, and which answers can be supported by records. A useful first conversation should reveal whether the opportunity fits your budget and preferred role, and what needs further investigation.

Use the questions below to prepare an owner conversation. Detailed financial, legal and tax decisions belong in a separate review with your professional advisers.

What does the business sell, and why do customers choose it?

Ask the owner to describe a typical order from first enquiry to payment. Who buys, what do they receive, and why do they return? Find out which products or services account for most activity, whether demand is seasonal, and which parts of the work happen on site.

Then ask: “What has changed most in the business over the past two years?” That invites a more useful explanation than simply asking whether the business is doing well.

Why is the owner considering a sale?

Ask what the owner wants their next chapter to look like and what timing matters to them. Are they seeking a complete departure, a staged handover, or an ongoing role? What would they want a buyer to preserve?

Treat the answer as context to investigate alongside the business records. Retirement plans, for example, do not answer questions about recent performance or operating demands.

What exactly is included in the asking price?

Request an initial inclusion-and-exclusion list. Does the proposed scope cover equipment, inventory, the business name, website, intellectual property, property, and particular contracts? How are cash, receivables, debt and other liabilities being described?

Ask whether the proposal concerns selected assets or shares in a corporation. CRA treats these as distinct ways to buy a business, with different tax considerations. Have your advisers explain the proposed structure; the asking-price headline does not establish it. CRA: Buying a business.

Our guide to asking-price inclusions provides a fuller scope checklist.

What does the owner actually do each week?

Ask for a recent ordinary week and a recent difficult week. How much time went to sales, delivery, hiring, bookkeeping, purchasing and resolving problems? Which calls reach the owner outside normal hours? Who covers holidays?

Ask which tasks require a relationship, skill or authorization you do not currently have. “The owner works about ten hours” is incomplete without knowing what those ten hours accomplish. Compare owner-operated and manager-run businesses before deciding which arrangement fits you.

Who are the essential people and customers?

Ask what each manager controls, who reports to them, and where the owner still makes the final decision. What happens when a key employee is absent? Which roles are difficult to fill? What is known, rather than assumed, about employees' intentions after a sale?

For customers, ask what proportion of revenue comes from the largest account and the largest few accounts, over what period. Are relationships tied to the owner personally? Start with anonymized information where appropriate. BDC identifies customer concentration and key employees as important commercial due-diligence topics. BDC: Conducting due diligence.

What premises does the business need?

Clarify whether premises are owned, leased or shared, and whether property is part of the proposal. For leased space, ask about the remaining term, renewal options, occupancy costs and any known planned changes. Which equipment is leased rather than owned?

Put questions about transfer permissions and continued occupancy on your lawyer's review list. Avoid treating “the lease is included” as a complete answer.

What do the financial figures describe?

For every figure, ask for its exact label, currency, period and source. Is it revenue, net profit, EBITDA or a seller-adjusted measure? Are you seeing completed annual results, current-year results or a forecast? What explains significant changes, and how have owner pay or unusual expenses been treated?

Ask which records can be made available to your accountant and under what arrangements. A figure repeated in a summary remains seller-reported until the relevant review occurs. BDC's due-diligence guidance calls for examining financial records and checking that the figures match the underlying information. BDC: Financial due diligence.

What will a workable handover require?

Ask what training, introductions and operating documentation the seller could provide. Identify the tasks you would need to perform on day one, and the ones you would still be learning. Discuss proposed availability, responsibilities and limits without assuming support has already been agreed.

Your buyer-question checklist

Use one row in your notes for each important answer: answer received / supporting record / open question / person to follow up.

• I can explain the business's main product, customer and sales process.
• I understand the seller's goals and proposed timing.
• I have an initial list of included and excluded items.
• I can describe the owner's weekly tasks and backup arrangements.
• I know which staff, customers and suppliers need closer discussion.
• I have identified premises and lease questions for review.
• Every financial figure has a metric, period and stated source.
• I know what handover support is proposed and still unresolved.
• I have agreed which documents or answers would make the next conversation useful.