Selling a bus and motorcoach operator in Canada

An owner who has decided to sell a coach company faces a sequence of regulatory questions. The buyer is acquiring coaches, client relationships and a standing with a safety regulator, and that standing may or may not move with the company. Do the regulatory homework before you list. A deal that looks agreed can stall when the authority behind the service turns out to need approval, notice or a fresh application from the buyer. This guide covers the order of work, not the price.

Find out which regime governs your service

Start by classifying what you operate. Under the federal Motor Vehicle Transport Act, an extra-provincial bus undertaking is one that connects a province with another or extends beyond a province’s limits, and a local bus undertaking is one that is not. Transport Canada says provincial and territorial regulations govern the commercial bus industry except for the rules its Motor Carrier Division sets for federally regulated (extra-provincial) carriers and drivers. If you run both kinds of service, you may answer to more than one authority, and each may handle a sale differently.

Ask the regulator how a sale is handled

The answers differ by province and by type of authority, so ask before you structure anything. In British Columbia, the Passenger Transportation Board says inter-city bus operators can apply to transfer a licence to another business entity, that both the transferor and the transferee must apply for approval, and that the transferor remains responsible for renewing the licence while waiting. The Board also says it does not need to approve share transfers, but if it becomes aware of a major transfer of shares, new majority shareholders or directors may need to complete a disclosure form or supply further information. Other provinces run their own regimes.

Choose the structure with those answers in hand

Whether the buyer takes the coaches and contracts in an asset sale or buys the company’s shares in a share sale changes what must be transferred, notified or applied for. In Ontario, the Ministry of Transportation lists among an operator’s responsibilities notifying it immediately about CVOR changes, such as changes in corporate officers, and says the CVOR program reviews information such as business ownership structure. Your lawyer should map, for each licence, certificate and registration you hold, whether it stays with the company, moves by approval, or has to be reissued.

Assemble the file a buyer will ask for

Be ready to produce maintenance and inspection records for each coach, driver licence and qualification files, client contracts and booking history, and your regulatory record. In Ontario, a CVOR abstract summarizes a carrier’s collisions, convictions and inspections, so it is worth reading your own before a buyer does. If your rating or record needs work, Ontario describes a voluntary facility audit as one route to improving a safety rating.

Keep the sale quiet

Think through how you would answer drivers, school and tour clients, and your own insurer if they heard of a sale before you were ready. Use a confidentiality agreement before sharing client names, fleet records or financials, and share the most sensitive material, such as the client list, only with buyers who have shown they are serious. Decide in advance who on your team learns of the sale and when, and what you will tell clients who ask.

Plan the timing around approvals

Where a regulator must approve a transfer, the approval may decide when the buyer can operate under the licence. The Passenger Transportation Board, for instance, says the transferor is responsible for renewing the licence while waiting for approval, so a renewal date that falls inside the process is your problem to manage. Ask each authority how long it takes, what the application needs from you, and what happens to service in the meantime. Then write the closing date and conditions of the purchase agreement around those answers, not the other way around.

What to tell staff and clients, and when

Once a buyer is committed, decide who tells whom. Plan what you will tell drivers about whether their jobs and pay continue, and what you will tell long-standing clients about whether the same coaches and the same people will show up. A school board or tour operator may have contract terms that require notice of a change in ownership, so read each major contract before you speak to the client. Your lawyer can tell you which contracts need consent and which need only notice. Plan the message so the first version a client hears is yours.

• Classify your service as local, extra-provincial or both, and name the authority for each
• Ask each authority in writing how a sale, share transfer or change of ownership is handled
• Pull your own regulatory record and fleet inspection history before a buyer does
• Sign a confidentiality agreement before releasing client or financial detail
• Have your lawyer map which permits stay with the company and which need approval