Buying a flatbed carrier in Canada

The question for a buyer of a flatbed carrier is whether it can run well without its founder, and the first job is to find out. Before price comes into it, a buyer has to know how the company will legally operate after closing, and that depends on where it runs and how the deal is structured. After that, the evaluation moves to people, freight and equipment. The sections below set out what a careful buyer asks, and where the answers should come from.

Work out how you will hold the registration

Transport Canada notes that provincial and territorial regulations govern the commercial bus and truck industry, apart from the rules it sets for federally regulated extra-provincial carriers. Ontario sells CVOR abstracts summarizing a carrier’s safety performance. Alberta requires a Safety Fitness Certificate of carriers that own any of the commercial vehicles listed on its page. Ask each regulator whether the registration stays with the company if you buy its shares. If you buy assets, ask what you must apply for yourself and how long it takes. Do this before signing, not after. Write down, for each province the company operates in, which regulator you would deal with, what it has told you in writing, and which of its answers your lawyer still needs to confirm. Ask the seller for the registration documents so you can compare the name and status on them with the company you are buying. Add any gap to your list of conditions for closing.

What to look for

Look for drivers with real securement and tarping experience, shippers who call the company directly, and a trailer mix that matches the freight. Look for backhaul arrangements that keep the open deck earning on the return trip. Then test each against the seller’s story. A carrier that says it has repeat mill freight should be able to show it by shipper. A carrier that says its crew is stable should be able to show tenure. The buyer’s job is to turn claims into documents and calls. Ask for driver tenure records, shipper invoices and the insurance claims history, and ask the seller for permission to speak with the largest shippers at a suitable time. Keep a note of which claims you have confirmed and which still rest on the seller’s word.

What the seller may not volunteer

Some questions may not occur to a seller, so put them directly. Ask which drivers have talked about retiring. Ask whether a securement incident ever led to a claim, and whether it is in the insurance history. Ask how much of the work comes from one or two shippers, and what those shippers have said about a change of owner. Ask whether the trailer mix was built for customers the company no longer serves. Ask how much of last year’s work depended on the construction or housing cycle.

What you must qualify for yourself

A buyer who has never run a carrier should check what regulators expect of the people in charge. Alberta says carriers need to identify the individuals in charge of their safety and maintenance programs. Ask each regulator, and get the answer in writing, what it requires of a new owner or officer, and whether a buyer without trucking experience can hold the registration alone. Keep the reply in your deal file so your lawyer can check it against the purchase agreement. Ask your insurer what it needs to know about who is driving and who is managing. Raise these early: depending on the answers, ask whether a partner, a manager with the right background or a different structure is needed, and tell your lawyer and lender about each.

• How you will hold the safety registration, and in which provinces
• Tenure and retirement plans of the securement-skilled drivers
• Revenue by shipper, and which relationships depend on the owner personally
• Fit between the trailer mix and the current customer list
• Claims and incident history, in particular anything tied to loads coming loose or shifting

Who else is looking

Ask the seller or broker whether other buyers are looking and what they have said, since that bears on how quickly you need to move. For the wider trucking picture, read buying a trucking business in Canada, and keep equipment appraisal in mind for the trailers.

Confidentiality and timing of the sale

Plan the order in which people learn. Ask your lawyer to have a confidentiality agreement signed before the seller shares detail, and ask the seller when customer names can be shared. Before asking to call the seller’s shippers, ask about the busiest part of their year. Talk to your lawyer about what can be said to drivers and when, since the drivers are part of what you are buying.