Buying an elevator service company in Canada

Someone evaluating an elevator service company is buying a contract book and a team, not a set of vans. The first question is whether you can run it. In Ontario, the safety regulator lists elevating devices among its regulated industries and says licences are not transferable, so a purchase does not make you licensed. Before you spend money on a price you should know which parts of the business you can staff, which you cannot, and what the regulator will want from you. This guide is written for a first-time or experienced buyer deciding whether a particular company is worth pursuing, and it is general information only.

What you must qualify for yourself

The Technical Standards and Safety Authority states that its licences are not transferable and that the onus to apply falls on the new owner, and it lists a separate application for an elevating device licence ownership or licensee change. That is Ontario’s regulator. Other provinces use different bodies and rules, and Quebec’s Régie du bâtiment du Québec has its own licence classes and a public search of licence holders. Find out which body governs the company you are considering and ask it, before you make an offer, what you or your company would need to hold and how long approval takes.

What a good company looks like

Look for agreements spread across many buildings, with clear terms and a renewal history you can check against the paperwork. Look for relationships that are held at the company rather than by the owner alone. Look for a mechanic team with more than one or two people holding the key certifications, and for service records that are complete. The aim is a business that keeps running if the owner steps back, because you will have to staff it from the first day. Ask to meet the mechanics before you sign. Their willingness to stay is something you can only learn from them, and a seller’s assurance is not the same thing. Read the key-person risk entry if the company leans on one or two individuals.

Check the ownership change before you price it

The way the deal is built changes what you have to do. BDC asks a purchase-loan applicant for the transaction structure, such as an asset or share purchase, and the two raise different questions. The WSIB, for example, says a purchase certificate is not required when shares are sold. If you buy assets in Ontario, the Workplace Safety and Insurance Board may hold a purchaser liable for amounts the vendor owes up to the date of sale if there is no valid purchase certificate. Ask your lawyer which structure fits the contracts and the regulator’s process, and price the deal after that answer, not before it.

What the seller may not volunteer

A seller may not think to mention things that matter to you, so put the questions yourself. Ask which devices depend on a manufacturer’s proprietary parts or diagnostic software, and whether that access is in writing and survives a sale. Ask which agreements are close to expiry and what the renewal conversation looks like. Ask about owner-mechanic hours that are not on the payroll, any agreement priced below cost, and whether any device has an open deficiency or past incident. Ask also whether any employee has said they would leave if the company is sold.

• Which regulator governs the company and what you personally must hold to take it over
• How many mechanics hold the key certifications and whether they will stay
• Which devices rely on proprietary parts or software and whether that access can be assigned
• The remaining term and renewal terms on the largest agreements
• Any open deficiency, past incident or pending claim tied to a serviced device

Plan the first months

Before you commit, sketch the first months after closing. Who will answer the emergency calls, who supervises the work, who talks to each major building owner, and who signs for the company with the regulator? If the answer to any of them is the seller, find out how long the seller is willing to stay and write it into the offer. A buyer who has not answered these questions has not yet finished evaluating the business, whatever the numbers say.

Who else may be bidding

Ask the seller or the adviser running the sale who else is looking. Another elevator contractor, a property-management firm or a group assembling several service companies may already have qualified staff, which could let them take on a company that an individual buyer cannot staff. If so, ask yourself what you can offer a seller that they cannot, and whether you can qualify without them.

Before you commit, read the guide on elevator service company due diligence so you know which documents and searches to request once you have a letter of intent.