Buying and selling businesses in Canada

Immigration To Canada Through Business Ownership

A Guide For Foreign Investors Buying a Business in Canada

Purchasing an existing Canadian firm might be a great way for foreign investors and entrepreneurs to gain entry to Canada under the Entrepreneur Work Permit Program.

It’s difficult to immigrate to a new country without a stable business with promising future prospects. To be successful, your business choice must complement your personality, educational background, and professional aspirations. In addition, you need to ensure that the company you want to buy satisfies the standards imposed by Canada’s immigration departments.

This article discusses the steps an international buyer should take to select a profitable Canadian company.

Buying and selling businesses in Canada

Step 1: Focus on Businesses that the IRCC Likes

For the sake of argument, let’s say you’re an entrepreneur thinking about relocating to Canada. If that’s the case, you’ll need to prove to Canadian immigration officials that your company’s planned operations in the country would have a “substantial economic advantage” for the country. There are a number of approaches to provide evidence of “substantial economic gain,” including:

The first choice is to acquire a company operating in a high-priority economic industry.

Alternatively, one could invest in a company whose work produces “substantial benefits,” or

The third possibility involves making a sizable financial investment in a company that will generate new jobs for Canadians.

Option 1: Preferred Industries & Sectors

Agriculture, including food/beverage production and food processing Information and communication technology
Aquaculture International Education
Aviation/aerospace Mining/Mineral Development
Biomedical (includes research and development, manufacturing, etc.) Mining & Natural Resources, Forestry
Cybersecurity Registered Patents
Cultural Industries Transportation
Energy or Natural Gas Sector Tourism, tourism products, attractions, services, and facilities
Exports Fintech
Farming Film and Video Production
Financial Services Green Economy


Option 2: Significant Benefit Activities

Developing new products & services Adopting new technology
Developing innovative approaches to traditional businesses Increasing exports from Canada
Value-added businesses Increasing research and development, and technology
Transferring technology and specialised knowledge Providing products or services to an under-served local or regional market

Developing new products & services Adopting new technology
Developing innovative approaches to traditional businesses Increasing exports from Canada
Value-added businesses Increasing research and development, and technology
Transferring technology and specialised knowledge Providing products or services to an under-served local or regional market

Option 3: Significant Economic Impact

Make a Canadian company investment of at least $250,000;

two new or retained Canadian jobs; and an enterprise that can sustain itself and its employees by earning enough money to cover their salaries.

Businesses that the IRCC generally dislikes

are bed and breakfasts, automated car wash operations,
hobby farms and home-based businesses, scrap metal recycling,
payday loan, cheque cashing, money changing and cash machine businesses selling used goods (excluding businesses that provide value-added services such as repairs, refurbishing, or recycling)
pawnbrokers real estate brokerage, insurance brokerage, or business brokerage
tanning salons real estate development activities
DVD rental stores goods trading businesses (e.g. import/export), unless value add is demonstrated
coin-operated laundries businesses involved in producing, distributing, or selling pornography or sexually explicit products or services, or providing sexually oriented services

Buying and selling businesses in Canada

Step 2: Research & Select the Right Business

If you’re looking for a job in the business world, your first stop should be the Internet. Businesses for sale can be found on various websites, such as Business for Sale, Business Sell Canada,, and even the Canadian Realtor site. You can specify your location on some sites down to the province and city.

However, not every website that claims to provide business listings can be trusted, even if they look similar to the ones I just mentioned. Kijiji and Craigslist are popular among con artists because they are not regulated, and the con artist may pose as a genuine business with little to no effort.

Here’s a tip: if you’re looking for a legitimately promising business, you won’t find one for less than $600,000. Less than that would indicate the company is not doing well financially. In contrast, the COVID pandemic may present an opportunity to acquire previously unattainable firms at bargain prices.

Call a Broker

As an alternative, you could hire a business broker to help you. Experts in locating and procuring the services of businesses for sale are at your disposal.

You can save time and effort by hiring a business broker, and you’ll also have access to their knowledge and experience. Western Canada Business Brokers, Sunbelt, and Aldrin Raphael Business Brokers are a few brokerage firms you could contact.

Narrow the Selection

If you’ve already found a few promising firms for sale, the next step is to do some preliminary research.

Investors can get three years’ worth of corporate tax returns by contacting the companies directly or having their broker make the initial contact. Schedule 100 and Schedule 125 will be T2 Corporation Income Tax Returns in Canada. You should also ask for their Goods and Services Tax/Harmonized Sales Tax (GST/HST) returns for the current year.

These records provide a snapshot of the company’s revenue for quick comparison. This is just the beginning of your investigation into the financial side of things, but it is a useful place to begin.

A meeting with the proprietors of your preferred choices is recommended if possible.

Investigate the motivations of the sellers to learn more about closing their establishments. The best way to get to know a company’s clientele, regular sales volume, and operational nuances is to spend a few days embedded within the company itself.

Our Tips:

Whatever route you take, you’ll want to make sure the company you choose satisfies these standards:

The company is still running and has been doing business for at least three years.

A minimum of two people are employed there (the more employees it has, the better).

The income is more than or equal to the costs (by at least $300,000).

There is some connection between your experience and the kind of business you want to start in Canada.

A promising future in terms of financial success is possible.

Step 3. Do Your Due Diligence

You have done your homework and have settled on a single business to purchase. The moment has come to send in the reinforcements.

Consider employing a group of seasoned experts to guide you through the due diligence procedure. With any luck, the company’s problems, such as bankruptcy filings, lawsuits, debt, zoning concerns, or other disagreements, will be uncovered during your research assignment. Your group can evaluate the potential threats and advise you on how to proceed with the acquisition.

When buying a firm in a foreign country, it is extremely important to conduct thorough due diligence. A team of experts familiar with the country’s legal system, liabilities, and rules would be required.

You will need professionals who can aid you through the buying transaction in addition to the due diligence specialists. Legal representation and financial advice from an accountant are necessities for any business.

You should consult an immigration lawyer before making any purchases if you want to use your business to seek Canadian immigration. Your immigration attorney can look into the company and tell you if it meets the requirements for your immigration status.

Unfortunately, many immigrants purchase enterprises with no background or expertise and from which they will not profit to facilitate their immigration. With our knowledge of the Canadian business climate and extensive local connections, we can assist you in locating suitable employment possibilities that will further your immigration plans.

How to sell your business

Selling your firm is a major step for any entrepreneur, whether you’re looking to retire or take on new challenges.

Before selling your company, you should talk to a tax professional and an attorney about how the transaction would affect your taxes and estate.

The next phase is to raise the worth of your company so that you may get the most money when you sell it.

Finally, you should hire a lawyer or consultant specialising in mergers and acquisitions to guide you through the sale process.

The right way to sell your business

A company can be sold in various settings.

Utilising the services of commercial intermediaries

Surveying the Competition

Proactively Reaching Out to Industry Leaders

Putting oneself out there as a prospective target for purchase

Each calls for the owner’s attention, but in different ways.

Time is of the essence when it comes to selling your business. In the context of a transaction, time is of the essence; if you’re in a rush, you might not get the price you were hoping for.

Similarly to selling a home, investing time into improving the property will result in a greater return when it comes to selling.

Think like a buyer.

To better the “property,” try seeing yourself as the buyer. Realise what they will be looking for, and adapt your company accordingly. Typical concerns of business purchasers include

A reasonable estimate of the value of a company, which can be calculated using various accounting techniques, such as the ratio of recent transactions or the deferred value of future cash flows.

Share swaps and vendor finance are two examples of acquisition funding options.

All investments include risk concerns, which must be considered. Buyers are investors, so keep that in mind. Potential for expansion, market conditions, liabilities, operational difficulties, etc., are all examples of such variables.

The process of incorporating the new owners into the established company.

Finding a buyer,

Most sellers start their search for a buyer by alerting their network of industry contacts and professional advisors (such as accountants and lawyers) who are in the habit of keeping tabs on enterprises for sale. They might also let trade groups and business brokers know they’re thinking about selling.


Can you buy a business in Canada?

If you want to become a business owner, you may buy an existing company or find a new one from the ground up. For federal income tax reasons, you’ll need to account for the acquisition of the business assets in one of two ways, depending on your choice.

Can a non-resident buy a business in Canada?

A non-resident or foreign entrepreneur or investor may register a company in Canada from scratch by opening up a branch office or founding a subsidiary company following the federal and provincial regulations governing corporations in Canada.

How long does it take to sell a business in Canada?

Canada had an average of 245 days (8.1 months), the Midwest averaged 240 days (8 months), and the South averaged 219 days until a business sold (7.3 months).

Can you buy a business in Canada on a work permit?

Work permits in Canada are issued for specific jobs with a specific employer for a set time. Starting your own business here while on a work permit would be breaking the law since you’d be violating the terms of your work permit.

How much should I invest in Canada to get PR?

There is a $200,000 investment floor if the money comes from a certified Canadian venture capital fund. At least $75,000 must be invested if the government of Canada recognises the angel group.

How do I avoid capital gains tax on a business in Canada?

Put your earnings in a tax shelter. Tax shelters act like an umbrella that shields your investments.

Offset capital losses.

Defer capital gains.

Take advantage of the lifetime capital gain exemption.

Donate your shares to charity.

Can I start a business in Canada without PR?

You do not need to be a Canadian citizen or resident to open a business or branch in Canada, says Cross Border and International Tax Expert James Belesiotis: A non-resident does not have to be a resident to operate a business or branch in Canada; however, the business might be subject to a higher tax.

How do you value a small business in Canada?

Capitalisation of typical net earnings. For investors, valuation includes future earnings from the acquisition.

Capitalisation of typical cash flows.

Discounting of expected future cash flows.

Determination of adjusted net assets.

What is a golden visa in Canada?

Category: Golden visas. Canada is the most popular immigrant destination for HNW families. The Quebec Immigrant Investor Program is the most popular path to becoming a permanent resident in Canada. Once selected, any new Canadian resident under any Quebec program may choose to reside in any Province of their choice.

Check out our other articles