Buying a concrete contractor in Canada

Anyone looking at a concrete contractor is trying to answer one question: if the owner stepped back tomorrow, would the phone still ring and the trucks still run? The answer sits in who the work comes from, who actually delivers it and what it costs to keep the equipment on the road. A first step is deciding which business is on offer, because a company built on structural subcontracts for general contractors and developers is a different purchase from one built on residential flatwork sold direct. The sections below separate a sound company from a weak one, set out what a seller may not volunteer, and list what the buyer has to qualify for personally. The verification itself comes later, in what to check before buying a business.

What a sound one looks like

A sound concrete contractor has work coming from several customers, with relationships that the company holds and not only the owner: repeat general contractors, developers or builders who deal with an estimator or project manager on staff. Its crews stay from season to season, and no single finisher is irreplaceable. Its trucks, pumps and forming systems are of mixed ages and on a maintenance schedule, rather than all nearing the end of their lives together. Its job records show margin by project, and its past pours have drawn few complaints. It can also work outside the easy weeks: a contractor with a real cold-weather capability earns across more of the year than one that stops when the temperature drops.

What the seller may not volunteer

Questions worth putting directly to the seller include:

• Which customer relationships are really the owner’s, and who at each general contractor awarded the last several jobs
• Cracking, settling or finish complaints on past pours that were settled by phone and never recorded
• Truck or pump replacement that has been put off so that recent earnings look stronger
• Jobs priced thinly to keep crews busy, which lift revenue more than they lift profit
• Finishers paid as independent contractors who in practice work under the company’s direction

On the last point, CRA’s guidance describes an employee as someone who generally works under the direction and control of the individual or business that hired them, and a self-employed worker as someone who carries on their own business and is free to choose how to carry out the contract. How each crew member is paid, and why, is a fair question to put to the seller and to an accountant.

What the buyer must qualify for personally

Some requirements attach to the person or company running the business and not to the assets, so confirm with the regulator whether they come across in a sale. In Quebec, the Régie du bâtiment du Québec organizes contractor licences by class and subclass, has a page on knowing whether a licence is required, and covers adding or replacing a guarantor on a licence, so a buyer can ask the RBQ what licence the new owner will hold and what it needs for it. In Ontario, a carrier’s commercial vehicle operator’s registration, or CVOR, carries a public safety rating, and a buyer who takes over mixer or pump trucks can ask about the carrier’s record and what registration will cover the fleet under new ownership.

Workers’ compensation accounts work the same way. The workers’ compensation account needs to be in good standing under the new owner so that general contractors can obtain the clearances Ontario’s WSIB requires of principals, and WorkplaceNL notes that employers who work as contractors will often need clearance as part of their contracts. Skilled Trades Ontario separates compulsory from non-compulsory trades, so whether a crew member’s work requires a certificate of qualification depends on the trade and the province, and the regulator answers that, not the seller. Bonding and insurance are the other qualifiers. A contractor that bids larger commercial work may depend on bonding capacity and cover placed on the owner’s history, so a buyer can ask the surety and the insurer directly whether the same capacity continues under new ownership instead of assuming it.

Weather, season and the first year

The first year depends on when the purchase closes. Buying ahead of the pouring season may mean inheriting a backlog and rehiring crews at the same time. Buying mid-season may mean taking over jobs in progress and the warranty exposure that comes with them. Distance to ready-mix supply affects cost and scheduling, and an account the owner negotiated may be reopened when the name on it changes, so a buyer can meet the supplier before closing as well as the customers. A transition period in which the seller stays through the first season is one way of carrying those relationships across.

Which buyer fits which contractor

What suits a buyer depends on what the buyer brings. A first-time owner-operator with estimating and site-supervision experience may find a flatwork-heavy company that can be run day to day a different proposition from a structural business where bonding capacity and general-contractor relationships carry much of the value, so ask which fits your experience. A buyer who already runs a concrete company may value the equipment and crews differently from a first-time owner, so ask each prospective buyer what they are looking for. Business brokers are partners in this market, and a broker who knows the trades can help a buyer test how a company fits.