By Jonathan Kleiman, Barrister & Solicitor · Published June 2026
A quick note up front: this is general information to help you think these things through. It isn't legal advice, and reading it doesn't make me your lawyer. Every situation is different, so get advice on your own before you act. It's written from an Ontario perspective.
If you came to my PACLA session, welcome. I told the group I'd write up the main points afterward, so here it is, with a few things we didn't have time for on the call. And if you didn't attend, don't worry, you can read this cold. There's no legal background required for any of it.
Almost all of this comes back to one idea: at some point, someone other than you will have to step into your business. Maybe you get sick, maybe you retire, maybe you sell, maybe you're just away for a month. The agents who handle that moment well are the ones who sorted it out before they needed to. Almost everything else is detail.
Protecting your clients
The biggest risk in any agency, and especially in a shop with several agents who each sign and manage their own clients, is that everything an agent knows lives in one place: their own head, their own inbox, their own filing system. The day that person isn't available, nobody else can step in cleanly.
The fix is to treat client information as something the business holds, in one consistent and organized way, instead of something each agent keeps to themselves. Do that, and succession turns from a crisis into a handoff. A lot of the worries below take care of themselves once that's in place.
How to store and organize client information
Keep everything in one organized place, whether that's a shared drive or a proper client-management system, so that for every client you can quickly put your hands on:
- the signed agency agreement
- every publishing, option, and sub-rights contract
- royalty statements and payment history
- a record of who is the agent of record on which titles
- key editor and publisher contacts
- the deal history
Here's the test I use: if something lives only in one person's inbox or on one person's laptop, then for succession purposes it may as well not exist.
A note on privacy. You're holding authors' personal and financial information. In Canada that comes with privacy obligations under federal privacy law (PIPEDA) for commercial activity. In practice that means controlling who can see what, and having a basic sense of how you keep that data safe. It also means being careful with newer tools: if you're tempted to drop client files into an AI assistant like ChatGPT or Claude to help organize them, stop and think about confidentiality first. They're useful tools, but client information deserves the same care online that it gets in your filing cabinet.
Who owns the file? If you work in a multi-agent shop, make sure your agency agreements, and any contractor or employment agreements, say plainly that the agency owns the client files and contacts, not the individual agent. It heads off an ugly fight later about who gets to walk out the door with what.
Planning for absences, short and long
Every client should have a named backup inside the firm who can cover when the responsible agent is out, and your client agreement should let the agency step in or reassign during an absence. For a short absence that might just be triage: answering the client, chasing a royalty payment, watching a deadline. For a longer one you want something written down: who responds, who has authority to act, and who's keeping an eye on things.
Write it down before you need it. You can't draft a coverage plan in the middle of an emergency.
If you're a solo agent, there's no colleague down the hall, so you have to build that backup yourself. The most practical version is a written, reciprocal arrangement with another agent you trust: if I'm out, you cover my clients, and I do the same for you. Spell out confidentiality, how far their authority goes, and how they get paid if they end up doing real work on a file (usually a simple fee split).
Planning for retirement and passing clients on
If you're hoping a colleague or successor will take over some of your clients one day, start earlier than feels necessary. A smooth handover usually takes years, not months, and there are two reasons for that.
First, clients choose. You can hand someone your files, but you can't make an author accept a new agent. So you need time to introduce your successor, let them work the relationship alongside you, and let the trust build on its own. The transitions that work are a slow period of overlap that ends in a formal handover, not a hard stop one Friday afternoon.
Second, the money has to be sorted out. Who becomes the agent of record from here on? How is the income from existing deals split or bought out? Agree it and write it down. Don't leave it to a handshake.
When it's actually time to move a client, it's part legal and part finesse. You might introduce your successor as "someone I work closely with and trust," let the relationship warm up, and only then make the change formal, with the client's agreement. You know your own relationships far better than any lawyer ever will.
How often should you revisit all of this?
At least once a year, plus any time something real changes: a new partner, a big new client, a health scare, someone joining or leaving. Put it in the calendar as an annual review. These plans go stale quietly, and that's the danger. Workflows drift, files move, fifteen years slip by, and then one day someone has to step into your business with no clue where anything is. A yearly once-over is what keeps the "break glass" plan usable.
What to have ready if you become incapacitated
This is the part most people skip, and it's the one that matters most. "Incapacitated" just means you're alive but can't run your business: you're in hospital, injured, or seriously ill.
In Ontario the tool for that is a Continuing Power of Attorney for Property (under the Substitute Decisions Act). It names someone you trust to handle your business and financial affairs when you can't, so they can deal with publishers, handle the banking, pay people, and keep things moving. If you're a sole proprietor, without one there may be no one with authority to run things while you're incapacitated, and your clients' money and deals can freeze in place. If you're incorporated, other directors or signing officers may be able to keep the company going, but a power of attorney still matters for your own affairs and your personally held shares (it gives authority over your property, not a seat on the board), so coordinate it with the company's officers, banking, and any shareholder agreement.
Two documents for two different events. A power of attorney covers you while you're alive but unable to act. It ends the moment you die. What happens to your business after that is your will's job. You want both documents, and you want them pointing the same way. A power of attorney with no will behind it, or a will with no power of attorney, leaves a gap.
Whatever documents you have, pair them with plain instructions, like a sealed envelope or an emergency-access password setup, so the person stepping in actually knows where things are and what to do. A trusted person with no information is almost as stuck as no person at all.
Holding client funds? If you ever hold client money, even for a few days, think about how it gets released if something happens to you. A power of attorney on its own may not be enough here, because that money usually isn't yours. It's held for the client, often in trust. So the power of attorney, your banking documents and account structure, your agency agreements, and your client-payment instructions all need to line up. Get the wording reviewed by a lawyer so your bank will actually honour it when the day comes.
Selling or winding down your business
Now the other side of the table: what happens when you actually want out. One fact decides almost everything here, so settle it first. Are you incorporated, or a sole proprietor? If you've never really pinned that down, my guide to sole proprietorship vs. incorporation in Ontario is the place to start.
If you are a corporation: two ways to sell
Sale of shares. The buyer buys the company itself and steps into your shoes. Everything inside it comes along: the agency agreements, the income streams, the contracts, the bank accounts. As long as your contracts don't require consent when ownership changes (some do, so check), the day-to-day barely changes. The owners change; the business carries on.
Sellers usually like a share sale for two reasons: it's a clean exit, and the tax treatment is often better. It's the same share-versus-asset choice that drives almost any Ontario business sale, and I go deeper on it in asset purchase vs. share purchase.
The tax point worth knowing (we didn't get to this on the call). When you sell the shares of a qualified small business corporation, the gain is usually a capital gain, and you may be able to use the Lifetime Capital Gains Exemption. For 2026 that shelters up to roughly $1.275 million of gain from tax, per person (your accountant can confirm the exact figure for the year you sell). There are real conditions to meet, and it's the kind of thing you set up years ahead, sometimes through a holding company, so talk to an accountant long before you sell. The headline is simple, though: when you qualify, a share sale can put a large amount of money in your pocket tax-free that an asset sale never would.
Sale of assets. Here the buyer doesn't buy the company at all. They buy specific things out of it (the client list, the contracts, the goodwill, the brand) and leave the corporate shell and its history behind. Buyers tend to like this, because they take exactly what they want and don't inherit liabilities they can't see.
The catch for agents is that contracts don't move automatically in an asset sale. Each one generally has to be assigned, and a lot of agency and publishing agreements need the other side's consent before you can assign them. So collecting those consents becomes the thing that sets your timeline.
If you are a sole proprietor
If you're not incorporated, there are no shares to sell, because there's no separate company. It's just you. So you're doing an asset sale whether you call it that or not: you sell the client list, the goodwill, your ongoing income from past deals, your brand and website, and you assign your agency agreements over to the buyer with client consent.
One thing to be clear about: with no shares, the Lifetime Capital Gains Exemption above isn't available to a sole proprietor. A lot of solo agents assume they're selling "the business" as one neat package. In law, you're selling a bundle of assets and assigning a bundle of contracts.
Vendor take-backs and earn-outs (common in this industry)
An agency's value is mostly relationships and future income, not hard assets, so these sales often get financed creatively instead of paid in full on day one. Two structures come up again and again.
A vendor take-back (sometimes called vendor financing) is where you, the seller, carry part of the purchase price. The buyer pays some at closing and the rest over time, so in effect you're the lender. It's common in businesses like yours for three reasons. Banks won't lend much against goodwill and relationships, so the seller has to fill that gap. It bridges the disagreement when the two sides can't agree on what the client list is really worth. And it keeps the seller motivated to make the transition go smoothly.
An earn-out is a close cousin: part of what you end up getting paid depends on how the business actually does after the sale, like how many clients stay on. That fits an agency well, because the buyer's real fear is whether your clients stick around once you're gone.
If you're the seller, protect yourself. A vendor take-back means you're not paid in full at closing and you're carrying the buyer's credit risk. Build in some security (for instance, the right to take the client list back if they default) and spell out exactly what happens if they stop paying. Get it in writing.
Getting your records in order to sell
A sale lives or dies on clean records. The more organized you are going in, the smoother it goes and the better the price. What a buyer most wants is to understand exactly what they're getting, and your contracts are what tell them. Have these ready:
- signed agency agreements with every client (this is the foundational asset; if these are missing or unsigned, a buyer can't be sure what they're buying)
- a schedule of which titles pay you, how much, and for how long
- the publishing and sub-rights contracts for your active titles
- financial statements, ideally three years, showing recurring income versus one-time income
- a client roster that flags who's active versus backlist only, and any heavy concentration (if one client is a big share of your revenue, a buyer will price that risk in)
- if you're incorporated, a reasonably tidy minute book
- your business name or trademark, domain, and brand assets
- any employee or contractor agreements, including confidentiality, IP-ownership, and non-solicitation terms, plus any restrictive covenants (non-competes need an Ontario-specific look, since they're now generally banned in employment agreements outside limited cases like a sale of the business or senior executives)
On the corporate minute book. If you're incorporated and haven't touched your minute book in years, don't panic. It can usually be brought current fairly quickly, as long as everyone who owns the business agrees on what actually happened. It only turns into a real problem when there's a genuine dispute between owners, because a buyer who smells a shareholder fight will walk. Keeping the basic corporate housekeeping current is cheap insurance, and it's one of the easier things to get right before a sale.
How long does a sale take, and where do deals get stuck?
For a small private business, you're realistically looking at a few weeks to a few months, depending on how organized both sides are. The usual path: agree on the basic terms and price, the buyer does due diligence on your records, the lawyers negotiate the real agreement, you collect any consents needed to assign contracts, you close, and then you run a transition period.
Where deals tend to fall apart: sellers who think their client relationships are firmer than they really are, contracts that are missing or weak, and records that don't survive the buyer's due diligence. The common thread is paperwork. Strong, organized, signed agreements are the thing you're actually selling, so the more solid they are, the better the sale goes.
When to bring in a lawyer, and when to bring in an accountant
Bring in an accountant on day one of the business, not just at sale time. Good bookkeeping keeps your taxes down, keeps your records clean, and means no nasty surprises when a buyer, or the CRA, starts looking. It pays for itself.
Bring in a lawyer once a deal looks real. You don't need one to pick apart a deal that may never happen. But before you sign anything that locks you in, even a letter of intent that says "non-binding", get a lawyer involved, because those documents often have parts that bind you anyway. A quick early call to check the deal is even possible, then real legal help once both sides agree on the big terms: that's the sweet spot. It's far easier to shape a deal early than to unpick it after you've signed.
If you would rather wind down than sell
Not every business is worth selling, and that's fine. If you'd rather just close up, the trick is to do it cleanly. Your agency agreements will say how to terminate properly, so follow them and don't leave clients in the lurch. If you're incorporated, winding up means paying off the debts and liabilities and ending contracts properly before you dissolve the company. Dissolving isn't a magic shield against every later claim. Under Ontario's Business Corporations Act, a dissolved corporation can still be pursued, and even revived, so the goal is to leave as little unresolved as possible before you close it. A clean wind-up with no debts is usually manageable, but it's worth a quick check with a professional so a small oversight doesn't land on you down the road.
A note for younger agents who want to be the successor
A few people asked about the other side of all this: being the one hoping to inherit or buy a list one day. A few thoughts.
If you want to be the person who inherits an internal client, work out what a retiring agent wants in a successor, and be that. Be responsive, be reliable, be someone clients trust. Build those relationships early and out in the open, so that when succession comes up you're the obvious answer, not a stranger. And where you can, get the arrangement acknowledged in writing, because a handshake understanding tends to evaporate the minute there's a death, a dispute, or a sale.
If you're thinking about buying someone's business, let them sell you on it, then dig underneath the pitch. Where does the money actually come from? Why do they think it keeps coming once you're the one running things? How concentrated is the client base? Are the contracts even assignable? And, most important, do you have a real feel for how this person worked and what you'd be stepping into? A business that looks great on a spreadsheet can still be a roller coaster in real life, so the relationships and the day-to-day matter as much as the numbers. If it doesn't feel right, wait for the next one. My checklist for buying a business in Ontario runs through what to look at.
On financing, the usual route in this industry is the vendor take-back I described above, where the seller carries part of the price. Beyond that there's ordinary small-business lending (though lenders get nervous about businesses that are mostly goodwill), earn-outs that tie part of the price to client retention, your own savings, or a gradual buy-in over a few years instead of buying the whole thing at once. Usually it's some combination of these.
Common questions
How far in advance should I plan to hand my clients to a successor?
Earlier than feels necessary. A smooth handover usually takes years, not months, for two reasons. First, clients choose: you can't make an author accept a new agent, so you need time to introduce your successor, let them work the relationship alongside you, and let the trust build. Second, the money has to be sorted out and written down, including who becomes the agent of record and how the income from existing deals gets split or bought out. The handovers that work are a slow overlap that ends in a formal change, not a hard stop one Friday.
What happens to my agency and my clients if I become incapacitated?
If you're alive but can't run your business, say you're in hospital, injured, or seriously ill, the tool in Ontario is a Continuing Power of Attorney for Property under the Substitute Decisions Act. It names someone you trust to handle your business and financial affairs, so they can deal with publishers, handle the banking, pay people, and keep things moving. Without one, a sole proprietor can be left with no one who has authority to act, and your clients' money and deals can freeze. (If you're incorporated, other directors or officers may still be able to run the company, but the power of attorney matters for your own affairs and your personally held shares, so coordinate it with the company's officers, banking, and any shareholder agreement.) Pair it with plain instructions and emergency access to your systems, because a trusted person with no information is almost as stuck as no person at all.
Can I sell my literary agency if I am a sole proprietor?
Yes, but what you're selling is different. If you're not incorporated there are no shares, because there's no separate company, so you're really doing an asset sale. You sell the client list, the goodwill, your ongoing income from past deals, your brand and website, and you assign your agency agreements over to the buyer with client consent. One thing to be clear about: with no shares, the Lifetime Capital Gains Exemption isn't available to a sole proprietor.
What is the difference between a share sale and an asset sale for an agency?
In a share sale, the buyer buys the company itself and steps into your shoes. The agency agreements, income streams, contracts, and bank accounts all come along, and the day-to-day carries on. In an asset sale, the buyer instead takes specific things out of the business (the client list, the contracts, the goodwill, the brand) and leaves the corporate shell and its history behind. The catch with an asset sale is that contracts don't transfer on their own. Each one generally has to be assigned, and many agency and publishing agreements need the other side's consent, so collecting those consents is usually what sets the timeline.
What is a vendor take-back, and why is it common when selling an agency?
A vendor take-back (or vendor financing) is where you, the seller, carry part of the purchase price: the buyer pays some at closing and the rest over time, so you're effectively the lender. It's common when selling an agency for three reasons. Banks won't lend much against goodwill and relationships, so the seller fills that gap. It bridges a disagreement about what the client list is really worth. And it keeps the seller motivated to make the transition go well. If you offer one, protect yourself with security and clear terms for what happens if the buyer stops paying.
How long does it take to sell a small agency?
For a small private business it's realistically a few weeks to a few months, depending on how organized both sides are. The usual path: agree on basic terms and price, the buyer does due diligence on your records, the lawyers negotiate the real agreement, you collect any consents needed to assign contracts, you close, and then you run a transition period. Deals tend to get stuck on the same things: contracts that are missing or weak, records that don't survive due diligence, and sellers who think their client relationships are firmer than they really are.
Should I sell my agency or just wind it down?
Not every business is worth selling, and that's fine. If you'd rather close up, the trick is to do it cleanly: your agency agreements will say how to terminate properly, so follow them and don't leave clients in the lurch. If you're incorporated, winding up means paying off the debts and liabilities and ending contracts properly before you dissolve the company. Dissolution isn't a complete shield from later claims (in Ontario, a dissolved corporation can still be pursued, and even revived), so the aim is to leave as little unresolved as possible before you close it. A clean wind-up with no debts is usually manageable, but it's worth a quick check with a professional so a small oversight doesn't land on you.
A few final thoughts
Those are the big ideas. Every agency and every deal is different, though, and the details are where it all happens. If something here raised a question about your own situation, send it my way. I'm glad to answer, and if a question looks useful to other people I'll add it to this page.
Jonathan Kleiman is a Toronto business lawyer. He works with closely held businesses, from incorporations, shareholder agreements, and corporate housekeeping through to buying and selling businesses and the disputes that come with them. He works on flat fees and offers a free first consultation.
Call 416-554-1639, email Jonathan@JKleiman.com, or reach out through the contact page.
Full disclaimer. The information on this page is general in nature, is current as of 2026, and is provided for educational purposes only. It is not legal advice and does not create a lawyer-client relationship. Laws and tax rules change and apply differently to different situations. Please obtain advice specific to your circumstances before acting. References to tax figures, including the Lifetime Capital Gains Exemption, are simplified and subject to eligibility conditions; consult a qualified accountant or tax advisor.