Is it suspicious if the seller wants to skip due diligence entirely?

The request alone does not show that something is wrong. A seller may have reasons of their own, and it is fair to ask what they are. What the request does is ask you to take on risk you could have measured. The useful question is not whether the seller is hiding something but what you would no longer be able to confirm. Some of what diligence checks is on public registers, and some of it is a debt that the law can attach to the buyer.

Registrations against the assets

A lender or supplier may have registered a security interest against equipment or inventory you think you are buying free and clear. Alberta’s government advises performing a personal property search before purchasing property, to check whether any liens are registered against it. Other provinces run their own registries. Without a search, a registered claim may only come to light after you have paid. A buyer due diligence checklist lists the searches to run.

Debts that can pass to the buyer

Some provincial debts can follow the business. In British Columbia, a purchaser without a clearance certificate issued for provincial sales tax is liable for an amount equal to any outstanding amount owed by the collector. Saskatchewan’s Workers’ Compensation Board says a buyer needs a section 156 clearance certificate to be released from legal responsibility for the previous owner’s account, and that a buyer without one becomes responsible for the outstanding balance if the previous owner owes money. Both are provincial rules, and other provinces differ.

If the seller still asks you to skip

• Ask the seller to explain the reason in writing.
• Ask which checks they would allow if not all of them, such as registry searches and clearance certificates.
• Ask your lawyer which protections in the agreement would replace the checks you would give up.
• Ask whether your lender requires diligence as a condition of funding.

The answers, and whether you go ahead, are your decision with your own advisers. Deavo does not tell buyers whether to proceed.