Selling a last-mile delivery contractor in Canada

An owner who has decided to sell a delivery contractor faces an unusual order of events. Here the platform or retailer you deliver for may decide whether any buyer can take over the routes, depending on your contract, so check the contract before you market the business. Before you market the business, read your delivery agreement, plan when and how the platform hears about the sale, and put your driver and safety records in order. This guide sets out that sequence. Whether a buyer can be found for your price depends on facts only your own documents can show.

Start with what your contract says about a sale

Read the agreement for any clause on assignment, change of control, notice or termination. Our glossary entries on the assignment clause and the change-of-control clause explain what each does. Whether the structure is a sale of assets or of shares can change which clause is triggered, so have a lawyer read the contract with your intended structure in mind. If the contract needs the platform’s consent, ask your lawyer how and when to raise it with the platform, and whether a confidentiality agreement should come first.

Decide who is told, and when

Word of a sale could reach drivers or the platform, and BDC notes that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers. BDC says to assemble a team to help with the sale, naming an accountant, a lawyer and a banker, and notes that a lawyer can supply information to buyers during due diligence. Plan the order of disclosure: advisors first, then serious buyers under a confidentiality agreement, then the platform if its consent is required, and drivers once the deal is firm enough to speak about plainly. Ask your lawyer whether the delivery contract itself restricts what you may share about it.

Put driver paperwork in order

A buyer may ask how each driver is engaged. The CRA distinguishes an employee, who generally works under the direction and control of the payer, from a self-employed worker who is free to choose how to carry out the contract. The CRA adds that all of the facts, including the actual terms and conditions of employment, determine a worker’s status, not just the intention, so a contract that calls a driver self-employed does not settle it on its own. In Ontario, the Employment Standards Act, 2000 says in s. 5.1(1) that an employer shall not treat, for the purposes of that Act, an employee as if the person were not an employee under that Act. Other provinces have their own employment standards laws. Gather the agreements, pay records and any complaint or ruling history, and ask your lawyer to review any driver you treat as a contractor before a buyer does.

Gather the safety and fleet records

In Ontario, a CVOR abstract summarizes a carrier’s or driver’s safety performance, including collisions, convictions and inspections, and you can order one from the province. Ontario also describes a CVOR driver abstract as a five-year record of collisions, safety-related offences, convictions and inspections relating to a driver, covering only the driver’s operation in Ontario. If your vans fall under a registration regime, pull your record early and understand any entries on it. Collect ownership documents, maintenance records, insurance history and lease or financing terms for each vehicle. Finding an open lien or a gap in maintenance records late in the process could affect the deal, so settle them early. Ask your lender what a payout letter for each financed vehicle involves.

Prepare the financial story

BDC says buyers will ask to look at your historic and interim financial statements, projections, tax returns and other records, and that an accountant helps prepare them. For a contractor, add route-level detail: revenue and cost by route or contract, driver cost, fuel, vehicle cost, and any charge-backs or deductions the platform has applied. Show clearly which costs belong to the business and which are the owner’s. BDC notes that unaddressed issues complicate a sale because the buyer has to think about resolving them without your knowledge of the business, and that if you cannot resolve every issue, it helps to show a buyer you have a plan to address them. Check that each figure can be traced from the platform’s statements to your bank deposits before a buyer tries.

What the buyer may ask you to stay for

BDC notes that buyers may insist on a reduced price if you choose to cut all ties, and that in a 100%-cash-out deal the buyer takes on more risk because the seller is no longer involved. Ask yourself whether you could introduce the buyer to the platform contact or help with the first routes. Decide in advance how much transition help you will offer, for how long, and whether it is paid. Write it into the agreement rather than leaving it to goodwill.