The expensive mistakes are rarely exotic — they are ordinary things done in the wrong order. Pricing on hearsay instead of a valuation, telling staff too early, ignoring the lease until an offer exists, starting the AGCO transfer late, messy books, relying on a repealed statute, and never asking the accountant the two tax questions that shape the whole deal.
What is the most common pricing mistake?
Pricing on hearsay. A friend sold “for three times something”, someone at a party quoted a rule of thumb — and that becomes the asking price. The problem: there is no public standard multiple for restaurants, and anyone quoting one sight-unseen — without seeing your books, your lease or your kitchen — should be treated with suspicion.
Real valuation is a discipline. The BDC’s guidance describes the recognized approaches — earnings-based, asset-based and market-comparison — and the short version is that value is built from your specific earnings, assets and circumstances, not borrowed from someone else’s deal. Price too high and the listing goes stale; too low and you gave the difference away. Get a proper valuation — often from a Chartered Business Valuator — before a number goes on paper.
When is the wrong time to tell your staff?
Early. Telling the team feels honest; in practice it is how good employees start job-hunting before any deal exists, and a restaurant that loses its kitchen mid-process is worth less than the one you priced. The professional practice: a confidential process, with staff told at the right moment — usually once firm — and told well.
There is also a legal layer sellers overlook. Ontario’s ESA guidance on continuity of employment says that when a business is sold and the buyer employs the seller’s employees, employment is deemed continuous — service carries over to the buyer for ESA entitlements. If the buyer does not keep them, the seller may owe termination and severance. Whether your buyer takes the team is a closing-cost question, not just a sentimental one. Put it to your lawyer early.
Why can’t the lease wait until you have an offer?
Because the lease decides whether the offer can close. Most restaurant sales are really lease assignments with equipment attached: the buyer needs the landlord’s consent, the remaining term and renewals are much of what they are paying for, and clauses on continuing liability, deposits and demolition rights can reshape the deal. Ignore the lease until an offer exists and these terms surface at the worst moment — buyer at the table, no leverage left.
The fix costs nothing but sequence: lawyer-led lease review before listing. The full checklist is in the lease assignment post in this series.
Why do sellers start the liquor licence transfer too late?
Because they assume it is closing paperwork. It is not. The buyer must apply through the iAGCO portal, you consent as the current licensee, and the AGCO can refuse — its guidance flags outstanding monetary penalties on the seller’s licence, or an ineligible buyer, as reasons a transfer will not be approved. If closing arrives first, the buyer can only operate under an Authorization to Contract Out approved before they operate.
The AGCO publishes no fixed processing timeline, which is precisely why late starts hurt: nobody can compress a regulator’s review at the end. Clear any penalties before listing and get the application and consent moving as soon as the deal firms up.
What do messy or blended books cost you?
Buyers, and then price. A buyer can only pay for what they can verify. Books that blend personal spending with the business, sales that never reached the records, missing statements — each forces the buyer to discount what they cannot prove, or walk. Since the Bulk Sales Act’s repeal, buyers lean on due diligence; clean records are the sale.
The fix takes time — another argument for starting early: have your accountant put the books in order, clean and consistent statements a stranger can follow, well before a buyer sees them.
Which tax questions should you ask before signing anything?
Two, and both belong to your accountant. First: does the GST/HST section 167 election apply? On a qualifying sale of a business, the CRA’s guidance provides that a joint election, made on Form GST44, can prevent GST/HST from applying to the sale. Sellers who never ask learn about it from the buyer’s side, or not at all.
Second: asset sale or share sale? The two structures can produce very different tax outcomes for you and different risk positions for the buyer, and the choice needs making before the offer is drafted. The mistake is never putting the question to the accountant until the deal is already shaped — I walk through the trade-offs in the asset-vs-share post in this series.
The mistakes and the fixes, side by side
| Mistake | Why it costs you | The fix |
|---|---|---|
| Pricing on hearsay | No public standard multiple exists; stale listings and money left behind | A real valuation — earnings, assets, market — before any number goes out |
| Telling staff too early | Departures shrink the very business you are selling | Confidential process; staff told once the deal is firm, with a plan |
| Ignoring the ESA question | If the buyer does not keep staff, the seller may owe termination and severance | Deal with employee continuity in the agreement, with your lawyer |
| Leaving the lease until an offer exists | Consent, term and liability surprises surface with no leverage left | Lawyer-led lease review before listing |
| Starting the AGCO transfer late | No published timeline to lean on; closing can arrive before anyone may pour | Clear penalties early; file via iAGCO as soon as the deal firms |
| Messy or blended books | Buyers discount or walk when they cannot verify | Accountant-cleaned records well before diligence |
| Planning around the Bulk Sales Act | Repealed in 2017 — effort spent on a ghost | Focus on due diligence readiness and the indemnities in the agreement |
| Never asking about s.167 or structure | GST/HST and after-tax outcomes left to chance | Accountant consulted on the GST44 election and asset-vs-share before drafting |
What do all of these mistakes have in common?
Sequence. Almost every one is a reasonable task done too late: the valuation after the price, the lease after the offer, the AGCO file at closing, the accountant after the structure is fixed. Sellers who do well run the steps in order, months before listing. The cheapest advice in this series is one word: early.
How I help
Commercial and business sales — including restaurants — are part of my practice, alongside residential work across the GTA. I run the confidential marketing and negotiation, sequencing the moving parts so these mistakes never get the chance to happen. Your lawyer and accountant handle the legal and tax execution.
The takeaway
Value the business properly, keep the sale quiet, read the lease first, start the AGCO work early, clean the books, forget the Bulk Sales Act, and ask your accountant about the s.167 election and deal structure before anything is signed. All of it is cheaper done early than repaired late.
Thinking about selling your restaurant?
If a mistake on this page felt familiar, that is the moment to talk — a confidential conversation about where you stand and what to do in what order. No pitch, no obligation.
connect@jatindua.com · 437-987-1925 · Book a confidential consultation
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Frequently asked questions
Does the Bulk Sales Act still apply in Ontario?
No. Ontario repealed the Bulk Sales Act on March 22, 2017, through the Burden Reduction Act, 2017. Buyers now rely on due diligence and contractual indemnities, which makes clean records and a well-drafted purchase agreement more important, not less.
What is the GST/HST section 167 election?
A joint election under section 167 of the Excise Tax Act, made on Form GST44, that per the CRA’s guidance can prevent GST/HST from applying to a qualifying sale of a business. Whether your sale qualifies is a question for your accountant before the agreement is drafted.
Do I owe my staff severance if the buyer keeps them on?
Ontario’s ESA guidance says that when the buyer of a business employs the seller’s employees, employment is deemed continuous for ESA purposes, with service carrying over. If the buyer does not employ them, the seller may owe termination and severance entitlements — get legal advice on your situation.
Is there a standard multiple for valuing a restaurant?
No public standard multiple exists. Recognized practice — the BDC describes earnings-based, asset-based and market-comparison approaches — builds value from your specific business. Be wary of anyone quoting a multiple sight-unseen, without examining your books and lease.
Sources
- BLG — The Bulk Sales Act (Ontario) Repealed. The March 22, 2017 repeal and the shift to due diligence and indemnities. Accessed 13 August 2026.
- Government of Ontario — Your guide to the ESA: Continuity of employment. Deemed continuity when a purchaser employs the seller’s employees; the seller’s potential termination and severance obligations. Accessed 13 August 2026.
- CRA — GST/HST Memorandum 14-4: Sale of a business or part of a business. The section 167 election, made on Form GST44, on a qualifying sale of a business. Accessed 13 August 2026.
- BDC — Business valuation: What’s your company worth?. The recognized valuation approaches for a private business. Accessed 13 August 2026.
Related reading
- How to sell a restaurant in Ontario — the complete guide
- HST when selling a restaurant in Ontario — the s.167 election explained
- What is your restaurant actually worth? Valuation in Ontario
About the author — Jatin Dua
Jatin Dua is a licensed Realtor with RE/MAX Quantum Realty in Etobicoke, Toronto. Commercial and business sales — including restaurants — are part of his practice, alongside residential work across the GTA. Content on this page is checked against primary sources — the AGCO, ontario.ca and the CRA — before publishing.
Reach him at connect@jatindua.com or 437-987-1925.