How do I sell my construction company?

Selling a construction company is partly an ordinary business sale and partly a regulatory handover. The ordinary part is a price, a structure and a purchase agreement. The regulatory part depends on the province. The examples below show workers’ compensation clearance rules in Alberta and British Columbia and contractor licensing in Quebec, each set by that province’s own regulator, and a buyer may need to confirm that the business is in good standing with bodies like these before closing. This guide covers three provincial examples, Alberta, British Columbia and Quebec, then the federal tax accounts and the brand. It is not a full checklist for every province, and your own province may differ.

Alberta: the buyer must get a clearance

WCB Alberta lists the situations in which Alberta’s Workers’ Compensation Act says you will need a clearance, and one is the sale of a business, section 132. It states that you have a responsibility to get a clearance when buying a business, its stock or equipment. The responsibility is the buyer’s, so be ready for a buyer to check your account. As a seller, check that your WCB account is in good standing and that your premiums are current, so the clearance does not delay closing.

British Columbia: unpaid premiums can follow the assets

WorkSafeBC explains why a clearance letter matters: if the seller is indebted to WorkSafeBC because of unpaid insurance premiums, the firm’s assets may be subject to a lien in favour of WorkSafeBC. It tells buyers to contact it before buying any assets from a firm, and says a clearance letter will protect them against these liens. As the seller, check that your premiums are paid and your account is in good standing before a buyer asks. WorkSafeBC says a clearance letter describing a firm as active and in good standing is honoured up to the date to which the firm has satisfied its assessment remittance requirements, so timing matters.

Quebec: contractor licensing sits with the RBQ

In Quebec, contractors are licensed by the Régie du bâtiment du Québec. The RBQ’s licence section includes a page headed “Change of legal status”, among other pages on obtaining and amending a licence. If you are selling, ask your lawyer and the RBQ whether the sale changes the licence holder or the legal entity, and whether the buyer needs its own licence or subclasses before closing. Do not assume a licence travels with the company’s name. If you work outside Quebec, look up which body, if any, licenses your trade in your province.

Shares or assets changes what the buyer inherits

BDC says purchasing shares comes with a very different set of responsibilities compared to purchasing assets, and that a buyer should search the Personal Property Security Registry for liens on assets it is about to purchase. For a contractor, assets can include equipment, vehicles and receivables, so expect a buyer to search them. Ask your lawyer which past obligations would stay with the company and which would stay with you under each structure. Read about asset sale vs share sale, and settle the structure with your lawyer and accountant before you set a price.

Close the tax accounts and keep the brand in view

The CRA says that if the business you are selling has employees, you must close your payroll account, and that if it has a GST/HST account you must contact your tax services office to close it. On the brand, section 48(1) of the Trademarks Act says a trademark, whether registered or unregistered, is transferable, either in connection with or separately from the goodwill of the business. If your company name is its brand, decide whether it sells with the business. Also ask how any holdbacks owed on current jobs will be handled; the glossary entry on construction holdback explains the term.

Confirm your own standing first

Before you list, collect your regulator letters, licence details, insurance certificates and safety records in one file. Having them together lets you answer a buyer’s questions from your own records. If you hold several licences or work in more than one province, treat each separately, because each regulator has its own process. Where a clearance or licence change takes time to obtain, start the request before the sale agreement is signed so that it does not become the last item holding up closing.

Work in progress and contracts

If your company has jobs in progress, be ready to explain how each one would be treated in the sale. For every open project, list the contract, the owner or general contractor, what has been invoiced, what is held back, and what remains to do. Check whether any contract needs the owner’s consent to be assigned, and whether bonds or insurance are in the company’s name. Ask your lawyer how warranty obligations on finished work will be allocated after closing, and how each answer should be reflected in the purchase agreement.

• Clearance status with your provincial workers’ compensation board, confirmed before listing.
• The licence or licences your trade requires, and whether they transfer or must be reissued.
• A list of open contracts with holdbacks, consents and warranty obligations.
• Equipment and vehicle lists, searched for liens.
• The CRA accounts that will close, and the brand decision.