Buying a residential renovation contractor in Canada

Buying a residential renovation contractor is a bet on a reputation and the people who protect it. Unlike a business with long contracts, this one earns by selling the next project, so you are buying a way of winning work as much as a set of assets. That should shape how you look at it. This guide is for someone evaluating a purchase. It covers what a good one looks like, what a seller may not mention, and what you personally may need to qualify for. It does not tell you whether to buy, and it does not value any particular company.

What a sound renovation company looks like

Look for a company where someone other than the owner sells and designs, where reviews and referrals are under the company’s name, and where project managers or leads run jobs day to day. Look for a pipeline of signed work and a deposit schedule that is followed rather than bent to cover costs elsewhere. Look for a bench of licensed subtrades who have worked with the firm for some time. Ask for evidence of each, not a description. A company that cannot show how the last twenty projects were found, priced and finished is harder to judge.

What a seller may not volunteer

Ask directly how many open projects are behind schedule, how much of the cash balance is homeowner deposits, and which homeowners have complained or threatened to. Ask who actually closes projects, and what happens to sales if the owner leaves. Ask whether any past work was done without permits or without the licensed trade the scope required. Ask whether the online reviews belong to the company or to the owner, and whether the seller expects them to carry over if the business name changes.

What you must personally qualify for

Check whether the work needs a licence you must hold. In Quebec, the Régie du bâtiment du Québec issues contractor licences, and its site lists the work that requires one and the work that does not. A buyer there should confirm with the RBQ what is required to operate the company, and what a change of owner means for any existing licence. In Ontario, the Electrical Safety Authority states that only electrical contractors it licenses may do electrical work for hire, so a buyer who intends to keep electrical work in-house needs to know what that licence demands. Elsewhere, ask the province and the municipality.

Weigh the reputation before you pay for it

Reviews are easy to read and hard to interpret. Read the complaints as well as the praise, and note how the company answered them. Ask which platforms the reviews sit on and in whose name, whether the company asks every client for one or only the happiest, and whether the business would keep its listings under a new name or a new owner. If reputation is most of what you are buying, ask the seller to introduce you to a few past clients and to the project managers and subtrades who did the work.

Understand the jobs you would take on

In an asset purchase, ask which assets and obligations you would take on, including open homeowner contracts. Ask your lawyer whether a contract in progress needs the homeowner’s consent to move to a new owner, and how homeowners who have paid deposits would be told who will finish the work. Ask the seller how each open job would be handled at closing, whether you would take on the obligation to finish it, and how the deposit money would be accounted for between the parties.

Check how your subtrades are covered

A renovation company hires subtrades, and who carries workers’ compensation coverage matters. WCB Alberta states that if you hire a contractor or subcontractor who does not have WCB coverage, you could be responsible for payment of any outstanding WCB premiums. WorkplaceNL says that where a contractor has their own coverage, a clearance letter clears you of responsibility if the contractor has unpaid assessments. Elsewhere, ask the province’s board. Ask how the company confirms coverage today, and whether it keeps records.

Excavation, locates and past site work

If the company digs for foundations, underpinning, drains or services, ask how it handles underground utilities. Ontario Dig Authority, formerly Ontario One Call, states that contacting it before you dig helps protect a project from damage, injuries and potential administrative penalties. Ask to see how the company requests and records locates, and whether it has had any strikes or claims. Outside Ontario, ask which locate service applies where the company digs.

• Who sells, designs and closes today, and how that continues after the owner leaves
• Whether reviews, domains and accounts belong to the company or to the owner personally
• What deposits are held, which jobs are behind schedule, and which clients are in dispute
• Which licences you must hold yourself, and what each regulator says about a change of owner
• How the company confirms subtrade licences and workers’ compensation coverage, with the records to prove it