Selling a courier company in Canada

An owner who has decided to sell a courier company will need to show the customer relationships, the driver group and the way routes are run on paper. Where business accounts are informal arrangements rather than long contracts, the buyer has little to rely on except records and the owner’s word. This guide covers the order of work: what to document before going to market, how to handle customer and driver information while buyers are looking, what the sale structure changes, and how to plan the handover so routes and customers carry on after closing.

Prepare the paper before you list

BDC says an accountant helps prepare year-end and interim financial statements, projections and other documents that buyers ask to see in due diligence, and that a lawyer familiar with business transitions supplies information to buyers and helps negotiate the purchase agreement. For a courier company, add three things of your own: a customer list showing revenue by account and how pickups are booked, a driver list showing how each is engaged, and a fleet list with maintenance records. A buyer who cannot verify the account book from your records has only your word to rely on. Gather dispatch records, invoices and route sheets for the full period you intend to show, and fix gaps now. Ask your accountant to flag anything in the statements that a buyer may question, such as personal expenses run through the company or one-time income, so you can explain it before it is asked. Decide early whether you would be paid in full at closing or carry part of the price, and ask your advisers what each choice means for who can bid and how long you stay involved.

Settle driver arrangements first

Buyers may ask how drivers are engaged, so know the answer and have the contracts ready. The Canada Revenue Agency says all of the facts, including the actual terms and conditions, determine a worker’s status, not just the intention, and that a self-employed worker is not under the direction or control of the payer. If the arrangements on paper differ from how the work is really done, speak to an accountant or lawyer before a buyer finds the gap. Ask your lawyer whether owner-operator contracts can be assigned to a buyer, and ask each driver whether they would sign with the new owner.

Keep customer information protected during the sale

Showing a buyer your customers can mean sharing personal information, such as the names and delivery addresses of people who receive parcels. Under section 7.2(1) of the Personal Information Protection and Electronic Documents Act, in addition to the circumstances in subsections 7(2) and (3), organizations that are parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if two conditions are met. First, they have entered into an agreement requiring the organization that receives the information to use and disclose it solely for purposes related to the transaction, to protect it by security safeguards appropriate to the sensitivity of the information and, if the transaction does not proceed, to return or destroy it within a reasonable time. Second, the information is necessary to determine whether to proceed and, if so, to complete the transaction. Subsection 7.2(4) says these rules do not apply to a transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information. Section 4.01 says that Part of the Act does not apply to business contact information an organization collects, uses or discloses solely for communicating with the individual in relation to their employment, business or profession. Share names only at the stage a buyer needs them, and ask your lawyer whether a provincial privacy law also applies.

Know what the structure changes

Whether you sell assets or shares changes what moves to the buyer. Ask your lawyer which vehicles, systems, driver contracts and leases would move to the buyer under an asset sale and which would need new signatures or the lessor’s consent. The Canada Revenue Agency publishes form GST44, which is used to elect not to have GST/HST apply to the sale of a business or part of a business. Ask your accountant whether it applies to your sale, and what the structure means for your tax position.

Plan the handover of accounts and routes

If customers are relationships rather than assigned contracts, the handover needs a plan. BDC notes that buyers may insist on a reduced price for the business if the owner chooses to cut all ties, so ask whether a stated period of introductions to key accounts and drivers could be part of the deal. Decide with the buyer who calls which customer, when, and what each driver is told. Write the plan into the agreement so it does not rest on goodwill alone. Agree also on what you will say to staff and customers before the sale is announced, so that nobody hears about it from a competitor. Ask your lawyer whether any customer agreement, vehicle lease or insurance policy needs the other party’s consent to move to the buyer, and ask for that consent early, before closing.

• Customer list by revenue, with how each pickup is booked
• Driver contracts and pay records that match how the work is really done
• Fleet list, ownership or lease papers and maintenance history
• A confidentiality agreement signed before any customer or driver names are shared
• A written handover plan naming who introduces the buyer to each key account