Buying a plumbing contractor in Canada

A plumbing company is a bundle of customers, trucks, people and paperwork, and one thing to settle early is the credential. Before you study the financial statements, work out who will hold the certifications the work needs once the seller is gone. This guide is for someone evaluating a plumbing contractor to buy. It covers what a good one looks like, what the seller may not mention, and what you must qualify for yourself. For the wider trades picture, see buying a trades business.

Start with your own qualification

Check with the trades body in each province where the company works whether plumbing work requires a certified tradesperson and how that applies to the company. Skilled Trades Ontario’s page separates work in compulsory trades from work in non-compulsory trades and speaks of journeypersons, not corporations. It also says that on renewal a wallet card expiry sticker is issued and the STO Public Register is updated to reflect the new expiry date, so in Ontario check the register for each certified person you would rely on. Ask the provincial trades body what a contractor needs, whether you can employ a certified person to meet it, and who that person would be. If the seller is the only certified plumber, ask the trades body whether the business could still do that work if the buyer has no certified hire.

What a good one looks like

Things to look for: calls coming from many customers rather than a few, work spread across several technicians, and records that match. Look for a dispatch process that does not run through the owner’s phone. Look for a service area where routes are short. Ask how customers find the company, and whether repeat business is booked by the company or requested by name. The Mechanical Contractors Association of Canada says contractors become members through one of its provincial or regional associations; ask whether the seller belongs to one.

What the seller may not volunteer

A seller may simply not think to mention certain things. Ask directly about emergency calls that always go to one technician, about permits that were never closed out, about warranty callbacks still open on completed jobs, and about any testing certifications that have lapsed or sit with someone leaving. Ask what share of service income was paid in cash and how it was recorded, because that affects what the financials can show. Ask what happens to the seller’s phone number and online reviews.

Workers’ compensation and who is exposed

Ask the workers’ compensation board that covers the business what it issues. In Ontario, the WSIB says that if you purchase a business’ assets you should get a purchase certificate, that it may hold the purchaser liable for all amounts owed by the vendor up to the date of sale without a valid one, and that the request must be made before the date of sale. In Newfoundland and Labrador, WorkplaceNL’s clearance page is about hiring contractors: it says employers who hire contractors, or who work as contractors, will often need clearance as part of their contract requirements, and that clearance confirms whether a contractor has its own coverage and is in good standing. If the company works as a subcontractor there, ask whether it can obtain one. These examples are not national rules. Ask the board for your province what it issues and require the seller to cooperate.

• Confirm who will hold the required trade certification after closing, in writing.
• Ask for revenue split by customer and by technician for several years.
• Ask how many emergency calls went to the owner personally.
• Request open-permit and callback lists for recent jobs.
• Ask which testing contracts exist and who certifies the work.

Asset purchase or share purchase

Which structure you use changes what you take on, so ask your lawyer what each would leave with you. WSIB’s page says a purchase certificate is not required when shares are sold because no new legal entity is created, which does not mean the history disappears. Your lawyer should explain the trade-offs and how each affects permits, contracts and insurance. The comparison guide on asset sales and share sales sets the structures side by side.

What a transition looks like

BDC says buyers may insist on a reduced price if a seller cuts all ties, and its guide quotes an adviser saying that in a 100%-cash-out deal the buyer takes on more risk because the seller is no longer involved. For a plumbing company, that argues for a handover period in which the seller introduces you to commercial accounts and technicians. Agree what the seller does, for how long and under what terms, and put it in the agreement. Ask how you will keep technicians who work well with the seller, and speak with them before closing if the seller allows it.