Selling a customs brokerage in Canada

An owner who has decided to sell a customs brokerage should check one thing before the rest: whether the right to keep doing the work is regulated and tied to particular people. If it is, the financial statements, the client list and the transition plan will need to be arranged around that. The order matters. Settle what the licensing authority needs first, because it may affect who can buy, how the deal is structured and who must stay on afterwards. Then prepare the records, control what clients learn and when, and be ready for the questions a serious buyer will ask.

Raise the licensing question first

Before you speak to a buyer, find out what the Canada Border Services Agency requires when a brokerage changes hands: whether notice or approval is needed, who has to hold which accreditation afterwards, and how long the process takes. Ask your lawyer to put that in writing. Then ask whether a share sale or an asset sale suits the firm better. The answer to whether a share purchase avoids transferring a company’s licences differs by licence, so do not assume it for this one. Knowing the answer before you talk to buyers lets you respond when the question comes up. Keep the written answer in your file so every later conversation starts from the same page.

Prepare records a buyer can follow

BDC’s guidance on selling a business says an accountant helps prepare year-end and interim financial statements and projections, and that a lawyer familiar with business transitions supplies information to buyers during due diligence and negotiates the purchase agreement. For a brokerage, add records that explain the fee base: fees by client, work by type, how long clients have been with you and a log of corrections or notices from the border agency. Decide in advance how you will explain any compliance matter, and whether you will raise it yourself before a buyer finds it.

Keep client identities confidential

Your clients may be the main asset, so naming them early is a confidentiality risk to manage. Share the client list in stages, anonymized at first, and only under a signed agreement. The confidentiality checklist covers the mechanics. Where files include personal information, section 7.2 of PIPEDA allows organizations that are parties to a prospective business transaction to use and disclose it without the individual’s knowledge or consent if, among other conditions, they have entered into an agreement requiring the recipient to use and disclose it solely for purposes related to the transaction, protect it with safeguards appropriate to its sensitivity and return or destroy it within a reasonable time if the transaction does not proceed. The section does not apply to a transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information (s.7.2(4)).

Check whether the buyer triggers merger review

The Competition Bureau says the Commissioner of Competition may review any merger or acquisition regardless of size, and that the Competition Act requires notice before closing for notifiable transactions; whether a transaction is notifiable depends on financial thresholds and other criteria, including certain exceptions, set out in the Act. If a likely buyer is a larger brokerage or a logistics group, ask your lawyer early whether notice is needed. It affects timing and the conditions in the purchase agreement.

Decide how you will run the process

Choose whether to sell through an intermediary, to approach a short list of likely buyers yourself or to speak only to one. BDC lists a range of advisers an owner may use, including a strategic adviser who helps prepare the business and structure the transaction. Whatever route you pick, keep a record of who has seen what, and release information in stages, so that a buyer who walks away holds very little. Decide what your own staff are told and when, and how clients will hear before any rumour reaches them.

Plan your own role and the client message

BDC notes that a seller who wants a smooth transition may benefit from staying involved after the sale, for example through vendor financing, an earn-out or a phased transfer, and that a buyer may seek a lower price if the seller cuts all ties. If clients rely on particular people, this is a practical question as well as a financial one. Agree who tells clients, when, and what you will say, and decide what you will do if a major client asks to leave. Put your role in writing, including how long you stay, what you are paid for it and what you will not do, so that the buyer and the clients hear the same account.

• Written confirmation from the licensing authority, or from your lawyer, of what changes when ownership does
• Fee records by client and by type of work, with the history behind each major client
• A list of staff holding accreditations, with their intentions after the sale
• A signed confidentiality agreement before any named client information leaves the firm