Glazing contractor due diligence

You have a letter of intent and now need evidence. Diligence on a glazing contractor is a matter of testing four things: that the projects and receivables are what the seller says, that the equipment is owned free of other claims, that the business and crew are properly registered and covered, and that the warranty tail on finished work is understood. This page lists documents, the searches to run, and what findings can mean. It is a checklist for your lawyer and accountant to adapt, not advice on a particular deal.

Documents to request

Ask for the open-project schedule with contract values, change orders and holdback status, completed-project files for the period you care about, the claims and callback log, subcontractor agreements, insurance certificates, equipment lists with serial numbers, safety program and training records, and the crew’s certification records with expiry dates. Ask for the last several years of financial statements and tax returns, and reconcile revenue against the project schedule. If the numbers and the schedule do not agree, ask why before moving on. Ask also for photographs or inspection reports of any completed project that has a claim, and for the correspondence with the client.

Search the registries

British Columbia’s government advises making sure personal property has no liens registered against it before you buy it privately, and that under the Personal Property Security Act the Personal Property Registry records security interests and liens against personal property, though some liens need to be filed with other government agencies. Ask your lawyer which provincial registry to search, given where the equipment and the company are located, and which names to search. Run it against the company and, if the equipment was bought from someone else, against the earlier owner. In Quebec, check the contractor’s licence in the Régie du bâtiment’s repertory of licence holders.

Workers’ compensation clearance

Provincial boards issue clearance letters. WCB-Alberta says a clearance letter states whether a contractor has coverage and whether its account is in good standing, and that if you do not have one and the contractor has not paid their premiums, you may be liable for them. WorkplaceNL says a letter clears you of responsibility for unpaid assessments if the contractor has its own coverage. WorkSafeBC lets you search a registered business and view its clearance status. Ask for the company’s clearance, and for those of any subcontractors the glazing crew relies on. These are provincial boards, so ask the board in each province where the company has worked, and ask your lawyer what a clearance does not cover.

Findings that can end a deal

A material water-infiltration or seal-failure claim on a finished curtain-wall project needs legal advice before anything else, because you need to know whether the liability would follow the business. Lapsed certification across the crew may be a gap to fix, so ask the provincial body what it affects. Equipment subject to someone else’s registered claim raises a title question for your lawyer. Relationships that would not survive a change of ownership change what you are buying. None of these automatically ends a deal, but each should be priced, ring-fenced in the agreement, or treated as a reason to stop.

Contracts and approvals

Read each major contract for assignment and change-of-control wording. If a developer or general contractor must consent, ask early, and ask the seller how that approach will be made. Confirm whether bonding is in the company’s name or the owner’s, and whether the surety must approve the new owner. Check lease terms for the shop and yard. If the deal is an asset purchase, confirm which contracts can be assigned and which need new paper.

Insurance and subcontractors

Ask for the insurance schedule and read what it covers: general liability, equipment, vehicles and any professional or completed-operations cover. Ask who the broker is and whether claims history is available directly from the insurer. Check which subcontractors the glazing crew relies on, whether they carry their own coverage, and whether any are the owner’s relatives or related companies. Ask whether any work has been done without a written contract.

Using a checklist alongside this page

The general buyer due diligence checklist covers corporate records, tax, employment and contracts that apply to any business. This page adds what is particular to glazing. Give both to your lawyer and accountant, and ask them to say in writing which items they have covered and which they have not. Keep a running list of open questions and who owes the answer, so nothing is lost before closing. Date each request and each reply, because the record of what was asked and answered can matter later if the seller and buyer disagree about what was disclosed.

• Reconcile revenue to the open and completed project schedules.
• Search the personal property registry for the company and equipment.
• Obtain workers’ compensation clearance for the company and subcontractors.
• Verify the licence or certification position with the provincial body.
• Review the claims log with your lawyer and decide how any exposure is allocated.