Selling a limousine and black car service in Canada

Start with the paperwork, not the vehicles. Whether a buyer can run your limousine company the day after closing may depend on the authority that lets it carry paying passengers. Whether that takes a transfer, a fresh application or nothing at all depends on where you operate and how the deal is structured. Work that out first, because it affects whether you sell assets or shares, how long closing takes, and what you can honestly tell a buyer in the first conversation.

Find out what happens to your licence

Start with whoever issues it. In British Columbia, the Passenger Transportation Board says both the transferor and the transferee must apply for approval to transfer a licence, and that you remain responsible for renewing it while you wait. It also says it does not need to approve share transfers, though if it becomes aware of a major transfer of shares, new majority shareholders or directors may need to complete a disclosure form or supply further information. Elsewhere the issuer may be a city. Ask in writing what a change of ownership requires, and keep the answer.

If you are in Québec, check the authorizations

The Act respecting remunerated passenger transportation by automobile says the owner of a qualified automobile may not transfer it unless the owner obtains the cancellation of the Société de l’assurance automobile du Québec’s authorization for that automobile or, as the case may be, the striking off of the owner’s registration with a transportation system operator. It also provides that a change to a transportation system may not be made without first obtaining a new authorization from the Commission des transports du Québec where the change is incompatible with the authorization issued, or in other cases set by regulation. Ask a Québec lawyer how that applies to your structure before you promise a buyer anything.

Get the accounts off your personal phone

Be ready to answer whether the clients are the company’s or yours. Put standing arrangements in writing where you can, move bookings into a system that records who ordered what, and introduce a buyer to the people who handle each large account only when the deal is far enough along. BDC notes that buyers may insist on a reduced price if the seller cuts all ties, so consider offering a defined handover period instead of leaving abruptly.

Prepare the records a buyer will ask for

BDC says an accountant can help you prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see as part of due diligence. For this business, add a vehicle list with ownership or lease status, maintenance records, driver files and the booking history. Tidy up anything you would rather explain than have found. BDC also says you may not be able to resolve every issue before the sale, but it is helpful to show a buyer you have a plan to address them.

Protect confidentiality

Decide how chauffeurs and corporate clients should hear that the owner is selling. Ask a lawyer to put a confidentiality agreement in place before a buyer sees client names, rates or driver files, and decide who on your team needs to know and when.

Decide how the sale will be structured

Whether you sell the company’s assets or its shares can affect what has to be approved. As the British Columbia Board’s page shows, a licence transfer needs approval from the Board, while a share transfer does not, though after a major transfer of shares new majority shareholders or directors may need to supply further information. Ask your lawyer and accountant how each structure would work with your licence, your vehicle financing and your tax position, and ask the licensing authority whether it treats the two differently where you operate.

Vehicles under lease or financing need their own steps. Ask each lender or lessor what it requires on a sale, and whether it must consent. Build that time into the closing plan, since it can run alongside the licensing process but can also hold it up.

Plan for the handover

Decide whether and when a buyer may meet the dispatcher, the senior chauffeurs and the person who handles the largest accounts. Decide in advance who will be told, in what order, and what you will say about their jobs. BDC says that if you want the business to carry on without you, there is a benefit to remaining involved afterward, for example through vendor financing, an earn-out, a phased transfer or a role as an advisor. Agree what that period involves, and whether you will be paid for it, before the buyer asks.

Keep the business running normally

While a sale is under way, the company still has to serve its clients. Keep vehicles maintained, keep renewals on time and keep the licence in good standing while you wait; in British Columbia, the Board’s page makes the transferor responsible for renewing the licence during the approval. A missed renewal or a deferred repair during that period is something a buyer can find and raise.

• The licence or permit status, and the written answer from the issuing authority.
• A vehicle schedule showing what is owned, financed and leased.
• Contracts or standing arrangements with corporate accounts and event partners.
• Driver files showing licences, permits and records.
• Insurance and claims history; ask your insurer what it can provide.