Selling a landscaping and grounds maintenance company in Canada

An owner who has decided to sell a landscaping company faces a timing problem. The business has a busy season, and a sale process that peaks in the middle of it can pull the owner away from the crews and customers a buyer is paying for. The people who matter to the price, which are the property managers who hold the contracts and the crew leads who run the routes, are also the people who should not learn about the sale by rumour. This guide follows the order in which the work has to be done. It covers records, confidentiality, the workers’ compensation board, licences and what a serious buyer will ask to see. Start earlier than feels necessary, because several steps depend on third parties, including your accountant, the workers’ compensation board, any lender holding security on equipment, and the provincial bodies that oversee your licences. Plan the timeline backward from the season you would like the buyer to take over, and leave room for the buyer’s own financing to be arranged.

Put the records in order first

BDC says an accountant helps prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see as part of due diligence, and that buyers will ask for historic and interim statements, projections and tax returns. Add the operating records specific to this business: every maintenance contract with its term and renewal date, a list of residential accounts, an equipment schedule, and your insurance and licence records. BDC also advises addressing customer concentration where possible and making sure the business does not depend on the owner’s presence. If either is a problem you cannot fix before the sale, plan how a buyer could manage it.

Decide who learns what, and when

BDC warns that, depending on a business-for-sale website’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. In a landscaping company, a crew that hears second-hand is a risk worth planning for. Decide the order: advisors first, then buyers who have signed a confidentiality agreement, then key crew leads, then customers. BDC’s transition advice includes a plan to retain employees, customers and suppliers and a plan for how you will communicate with them about the change.

Clear the workers’ compensation account

Provinces run their own workers’ compensation boards, and the rules on a change of ownership can differ. In Ontario, the WSIB says that if you are selling or purchasing a business’s assets, you should get a purchase certificate, that the request must be made before the date of sale, and that a certificate is valid for 30 days from its issue date. It adds that the purchaser may be held liable for amounts the vendor owes up to the date of sale without a valid certificate, and that a share sale does not need one, although the Share Purchase Agreement still has to be submitted to the WSIB. WorkSafeBC tells buyers to contact it before buying assets, because assets may be subject to a lien if the seller owes premiums. Check your own province’s board, and ask early, since the request has to be made before the sale in at least one province. Your lawyer can tell you whether your sale structure needs a clearance and who orders it.

Know which licences stay with you

If the company applies pesticides or fertilizers, ask your provincial environment ministry whether that work needs a licence, whether an applicator licence is held by the company or by a named person, and what a buyer needs to do to carry on the work. If the licence belongs to a person, a buyer cannot assume it passes with the company. Decide whether that person will stay on through a transition, or whether the buyer needs to qualify someone. In Quebec, the Régie du bâtiment du Québec has a page on work requiring a licence, so check whether any of your design-build work falls under it. Write down every licence, permit and registration the company holds, who holds it and when it expires, so that the buyer sees the full list from you before a lender or lawyer finds gaps.

What the buyer will ask for

Be ready with the contract book, equipment list, financial statements, tax returns, payroll records and proof of insurance. BDC’s acquisition loan page asks a borrower for the business’s financial statements or income tax returns, so a buyer financing through BDC will need some of the same documents for the lender. Review each customer contract for notice or consent clauses before the buyer does, since a clause that requires the customer’s approval to assign the contract changes your timeline. For fleet questions, see how a fleet is valued in a sale. Choose one person, such as your lawyer, to manage requests so that nothing reaches you in three different forms.