Buying a painting contractor in Canada

Someone evaluating a painting contractor may be buying a job for themselves as well as an asset. Ask whether the business is crew-based with low fixed costs; if so, much of what you are acquiring is a working system: how jobs are found, priced, staffed and finished. This guide is about judging that system and about what you must personally put in place. It does not cover the document checks that come after a letter of intent, which sit in the due diligence guide, or how to pay for the purchase, which sits in the financing guide. It is general information, not a recommendation to buy.

What a good one looks like

A well-run painting contractor can show you where next month’s work is coming from without pointing at the owner. Look for a foreman or lead painter who runs sites, someone besides the owner who can quote, a pipeline of bookings for the next few weeks and customers who have come back. Ask for the last two seasons of jobs by type, so you can see whether the business leans on one customer, one builder or one season. Then ask who the owner speaks to every week, and imagine that call being yours.

What the seller may not volunteer

A seller’s account may not cover everything, and some gaps may simply be unexamined. Ask about crew turnover and about whether key painters have been told about the sale. Ask whether the owner personally estimates and closes everything. Ask about work on older buildings: what was found, how it was handled and where the records are. Ask about warranty callbacks and unpaid holdbacks owed to the business. Ask whether any customer relationship depends on the owner’s personal discount or favour. None of these questions is a sign of bad faith. They are the ones that change what you are really buying.

What you must qualify for yourself

Check which of the business’s registrations carry over to you and which you must hold yourself. In Ontario, WSIB says a purchaser of business assets may be held liable for all amounts owed by the vendor up to the date of sale if no valid purchase certificate is obtained, and WSIB’s construction clearance policy says a principal who directly retains a contractor to perform construction work must obtain a clearance confirming the contractor is in good standing. The policy does not apply to householders who directly retain a contractor for exempt home renovation work only. Whether that policy applies to the painting you will do is a question for WSIB. In Quebec, the Régie du bâtiment du Québec publishes a page on whether a contractor’s licence is required for the work. Check each of these for your province before you commit.

If there is a franchise banner

A painting franchise adds a franchisor to the transaction. If the franchisor must approve the buyer, you may have to apply, be trained or pay a fee, and the transfer may not close without it. Ask for the agreement early, read the transfer and non-compete clauses, and ask what happens to your territory. Our answer on who has to approve a franchise resale covers the questions to ask.

• Who estimates, who leads sites, and how long have they been there?
• How much of last year’s work was repeat or contracted, and can that contract be assigned to you?
• What records exist for older-building work and any hazardous-materials handling?
• Which registrations, licences or approvals do you need in your own name?
• What does the owner personally do that you will need to replace?

Test the crew, not just the numbers

Ask to meet the foreman and, if the seller agrees at the right stage, a few of the lead painters. You are listening for whether they plan to stay, how they are paid and what they think of how jobs are scheduled. Ask how the business finds and keeps painters and what happens when a job runs late. Ask whether any crew member is an independent contractor rather than an employee, because the CRA publishes guidance on employee or self-employed status, and a lawyer can tell you how the classification affects payroll and workers’ compensation. A crew that stays through a transition is part of what you are buying, so treat it that way.

Who else is buying

Ask the seller whether other buyers are involved, since that may affect timing, and be clear about what you can offer beyond price, such as a quick close, continuity for the crew or a handover period. That does not change what you should verify.