Selling a general contractor in Canada

An owner who has decided to sell a general contracting business is selling more than equipment and a name. Ask how much of the company’s value sits in work it has signed, relationships it has built and the standing that lets it bid. Any of the three can be tied to the owner personally. Preparation is mostly the job of moving them into the company, and of finding problems before a buyer does. This page follows an order that works, with the regulators you may need to deal with along the way. For the wider trades sale, see selling a trades business.

A workable order of work

A workable order is relationships first, then compliance, then bonding and consents, then the market. Relationships may take longest to change, so start there. Compliance problems, such as a lapsed clearance or a licence in the wrong name, are better fixed before a buyer finds them. Bonding and consents depend on other parties’ answers, which you do not control. Going to market last means your answers are ready when buyers ask. Allow time for each regulator, because each runs its own process. The trades seller readiness checklist is a useful companion.

Start with who holds the relationships

List every active and pending project and write down who holds the client relationship, who holds the architect or developer contact, and who manages the job day to day. Where the answer is always you, begin handing those relationships to a project manager or senior estimator now, and introduce that person to the clients while you are still running the company. Do the same with your main subtrades, by giving the project manager the calls about schedule and payment that now come to you. Write down what you know about each subtrade’s strengths and any history of problems, because that knowledge leaves with you unless it is recorded. Document that the work continues without you, so you can answer questions about the backlog.

Get workers’ compensation standing in order

Some workers’ compensation boards tie the party that hires a contractor to the contractor’s standing. In Ontario, the WSIB’s policy says a principal that directly retains a contractor for construction work must obtain a clearance certificate, and starting the work without one is an offence for both; the policy does not apply to householders who retain a contractor for exempt home renovation work only. WorkSafeBC, WCB Alberta and WorkplaceNL run their own clearance processes. WorkplaceNL says a clearance letter confirms whether a contractor has its own coverage and is in good standing, and that either the contractor or the person hiring it can request one. Check your own account and your subtrades’ before listing.

Licences, registrations and the tax accounts

Ask each regulator what a sale does to your licence. In Quebec, the Régie du bâtiment du Québec has separate pages on change of legal status, adding or replacing a guarantor, and death of a guarantor or licence holder, so confirm the steps and timing before you promise a closing date. Federally, the CRA says that if you sell or stop operating your business you must close your CRA program accounts, and that a change of owners may require registering a new business number and new program accounts. Whether the buyer takes shares or assets changes what moves, so settle that with your lawyer and accountant early.

Bonding, consents and confidentiality

Speak to your surety before you speak to buyers, and ask what it would need to see from a new owner. Read your larger contracts for consent and assignment clauses, and note which clients would have to agree. Share names of clients, staff and subtrades only after a buyer has signed a confidentiality agreement, and agree in advance who tells your clients and your crew, and when. Settle this so that news of the sale does not reach clients, subtrades or the surety before you have a plan. Ask your lawyer which contracts oblige you to tell a client about a sale, and when, so that you tell clients yourself and are not caught by a notice requirement.

What to have ready for the buyer

Have these documents assembled before the first serious conversation, so the answers come from you, in the order you choose, and not from a buyer’s questions. Anything you cannot document is a question you will have to answer.

• A backlog schedule showing each contract’s value, status, margin and any consent needed to assign it
• A list of completed projects with any open deficiency claims, lien notices or holdbacks still unpaid
• Your subtrade list and the workers’ compensation clearances you hold for them
• Your licences, registrations and surety arrangements, with the dates they expire
• A short note on who runs jobs today and who will after the sale