Last-mile delivery contractor due diligence

A buyer under a letter of intent has whatever time that letter allows to confirm what the seller has said, so check its deadlines first. This guide lists which documents to request, which registry searches to run, and which findings can end a deal in this sub-sector or change its price. Your lawyer and accountant should direct the work and decide what applies to your structure. Use this page as a way to organize the request list, not as a substitute for their review.

The delivery contract and everything attached to it

Request the signed agreement, all amendments, rate schedules, performance scorecards, notices of breach or warning and any correspondence about renewal. Check who owns the routes or territory, whether the platform can reassign them, and what the contract says about assignment and change of control. Compare what the contract says with how the business actually works. If the platform has signalled it will not renew, or the performance record is under review, raise it with your lawyer at once.

Registry searches against the vans and the company

Ontario’s Personal Property Security Registration system, accessed through Access Now, lets a person register a notice of security interest or lien on personal property and search for one. Ontario says a search can show that a seller or previous owner has obtained a loan and that the lender may have rights in the goods. Ask your lawyer which searches to run against the seller, the business name and each van. Other provinces run their own registries, such as the Personal Property Registry in British Columbia, so search where the seller and the vehicles are located. Our answer on how to run a PPSA registry search before buying business assets covers the steps.

Safety and compliance records

In Ontario a CVOR abstract summarizes a carrier’s or driver’s safety performance, including collisions, convictions and inspections, and the CVOR program monitors and evaluates operators’ safety records. Ask the seller for the abstract and any carrier record, and compare it with what the seller has told you. Ask for inspection reports, maintenance logs and any order or notice from a regulator. If the business operates only light vans, confirm whether a CVOR certificate is required rather than assume it, since Ontario says it is not required for some lighter trucks and bases the weight test on registered gross weight or actual weight.

Driver engagement and employment records

Request each driver’s agreement or employment record, pay history, and any complaint, claim or audit. The CRA says either the worker or the payer can ask for a CPP/EI ruling when status is uncertain, so ask whether anyone has. Under Ontario’s Employment Standards Act, 2000 s. 5.1(1), an employer shall not treat an employee as if the person were not an employee under that Act. If drivers are treated as contractors and the evidence points to employment, ask your lawyer whether the cost could follow the business to you. Talk to your lawyer about how the purchase agreement should allocate that risk.

Financial records the platform can confirm

The seller’s books are one version of the revenue. The platform’s own statements are another, and the bank deposits are a third. Ask for the platform’s statements or settlement reports for the periods the seller relies on, and have your accountant reconcile them to the deposits and to the financial statements. Look at any deductions the platform has applied, such as any charge-backs for missed or damaged parcels, and ask whether they are recorded as costs or netted against revenue. BDC says buyers will ask to look at a seller’s historic and interim financial statements, projections, tax returns and other records, so ask for the same. Treat any gap you cannot explain as a question for the seller, not a rounding difference.

Findings that change the deal

Some findings may call for a price change or a condition: a platform that declines to approve you, a probationary status, an unexplained gap between reported and platform-confirmed revenue, or a lien on a van that was supposed to be free. Others, such as an open driver status dispute or a poor safety record, are worth having your lawyer assess before you continue. Write each finding down with the document that shows it, so negotiation rests on evidence and not on recollection. Where a finding cannot be fixed before closing, ask your lawyer whether it belongs in a condition, a price adjustment, a holdback or a seller’s promise to cover the cost.

• Platform agreement, amendments, scorecards and any notice of breach or warning
• Lien searches in each province where the seller or the vans are located
• CVOR abstract or equivalent carrier record, inspection reports and maintenance logs
• Driver agreements, pay records and any complaint, audit or ruling
• Platform statements reconciled to bank deposits for the periods the seller relies on