Selling a concrete contractor in Canada

An owner who has decided to sell a concrete contracting company has more say over the outcome than it may seem, because much of what may worry a buyer can be fixed or documented before the business goes to market. The work runs in a sequence: make the numbers readable by job, move relationships from the owner to the company, clear what encumbers the trucks and the past work, bring the compliance accounts into good standing, and only then talk to buyers. Selling mid-season with half-finished jobs and a lender’s security on every truck is a different transaction from selling in the quiet months with clean records. The end-to-end sale process covers the general order of events.

Make the job records readable

BDC’s guidance for sellers says buyers ask to see historic and interim financial statements, projections and tax returns, and that an accountant can help prepare them. For a contracting business a schedule by job makes the same numbers readable: contract value, cost to date, amount billed, and the amount the customer is still holding back and when it is due to be released. A job-cost history that shows margin on structural work and on flatwork separately lets a buyer see which half of the business earns.

Move the relationships off the owner

Structural work may depend on relationships the owner holds personally. A seller who wants those relationships to count in the price can introduce a second person early: a foreman or estimator who will stay, and later the buyer once an agreement is in place. Confidentiality shapes the order. Before a deal is signed, it helps to plan which general contractors, which supplier and which crew members learn what and when, and to put a confidentiality agreement in place before sharing customer-level data. A buyer may also ask how long the seller will stay. BDC’s guidance says that in a 100%-cash-out deal, where the seller is no longer involved, the buyer takes on more risk and would usually want a significant reduction on the valuation, so an agreed transition period is part of the preparation and not an afterthought.

Clear the trucks and the past work

Mixer and pump trucks and forming systems may be the largest assets in the sale, and a lender may hold registered security over them. In Ontario the Personal Property Security Registration system, reached through Access Now, shows whether a lien has been filed against personal property. British Columbia and Alberta keep their own registries, and Quebec keeps a register of personal and movable real rights. If a lender’s security covers a truck in the sale, ask the lender and your lawyer what a release or payout will require, so payout figures and discharge arrangements can be lined up beforehand. Our explainer on what a PPSA search is shows what a search returns.

Tax follows the equipment. CRA’s capital cost allowance guidance refers to recapture of CCA being added to income, so how the price is split between trucks and other assets is a question for the seller’s accountant before the price is set. The other thing worth clearing is any open complaint about a past pour. An open complaint on a foundation could become a negotiation over price or a holdback, so it helps to resolve or at least document those before listing.

Bring the compliance accounts into good standing

Workers’ compensation is one account that matters. In Ontario, WSIB policy requires a principal that directly retains a contractor for construction work to obtain a clearance certificate confirming the contractor is in good standing, and one of the requirements for an account to be in good standing is that the contractor has reported appropriate premiums for all past reporting periods. WCB-Alberta and WorkplaceNL in Newfoundland and Labrador issue clearance letters that confirm whether a contractor has its own coverage and is in good standing. A seller with unreported payroll could meet that problem at the first clearance request, so reconciling the account before a buyer asks is worth considering.

Two provincial points can change the timetable. In Ontario, section 69 of the Labour Relations Act, 1995 provides that where an employer bound by or a party to a collective agreement sells its business, the person it is sold to is bound by the agreement as if it were a party, until the Ontario Labour Relations Board declares otherwise. The section has further provisions that a labour lawyer should read. In Quebec, the RBQ licenses contractors by class and subclass and publishes guidance on the amendment of licences and on a change of legal status, so a buyer who needs a licence in place at closing may want to ask the RBQ early about amending it.

What can delay a close

• A lender that has not yet agreed a discharge for security over trucks that form part of the sale
• A workers’ compensation account that cannot produce a clearance letter when the buyer or its lender asks
• A major customer or the ready-mix supplier that has not confirmed it will carry on under the new owner
• An open complaint on a past pour that the buyer wants priced or held back against

Timing against the season

Concrete work can be seasonal, and the date of closing decides who carries what. A close ahead of the pouring season can let the buyer inherit the coming backlog. A close in the middle of the season splits jobs in progress between two owners, so the agreement needs a cut-off for billing, for who finishes each job, and for who answers a later complaint about it. An owner can bring in a business broker for marketing and negotiation; a broker, an accountant and a lawyer each cover a different part of this list.