Selling a painting contractor in Canada

An owner who has decided to sell a painting contractor has a defined job: make the business easy to understand, easy to verify and hard to misread. BDC points out that many people underestimate how long it takes to prepare a business for sale, especially if there are issues to fix. A painting contractor’s issues can be practical ones, such as an owner who still quotes every job, a workers’ compensation account with a balance outstanding, or contracts nobody has read in years. This guide follows the order an owner would work in. It is general information, not advice on any one sale.

Start with the statements and the people

BDC says an accountant helps prepare year-end and interim financial statements, projections and the other documents buyers ask to see in due diligence, and that buyers will ask for historic and interim statements, projections and tax returns. Do this before you speak to anyone outside your advisers. Then list the crew: who leads sites, who estimates, who handles supplier accounts. That list helps show whether the business runs without you, so consider handing over estimating and customer contact before a buyer appears.

Clear the workers’ compensation account

In Ontario, WSIB says that if you are selling or purchasing a business’s assets, you should get a purchase certificate. It confirms that the seller has WSIB coverage and no outstanding debts on the account, and WSIB may hold the purchaser liable for all amounts owed by the vendor up to the date of sale if no valid certificate is obtained. The request must be made before the date of sale, and a certificate is valid for 30 days from issue. WSIB also says that in a share sale a new legal entity is not created, so a purchase certificate is not required, though it asks for the share purchase agreement. In other provinces, ask the provincial workers’ compensation board what applies.

Deal with the paperwork on your side of the table

Gather the repaint contracts, any property-manager agreements and the leases for your shop or storage space, and read each for assignment and termination terms. Confirm which equipment is owned outright and which is financed or leased, since a buyer can search for registered security interests (see Ontario’s Access Now). Decide how the sale is structured, an asset sale or a share sale, with your lawyer and accountant. If you ask whether GST/HST applies to an asset sale, the CRA publishes form GST44, an election concerning the acquisition of a business, which your accountant can assess.

Keep it confidential

Decide when and how crews and customers will be told. Ask any prospective buyer to sign a confidentiality agreement before you share names, rates or contracts, and release information in stages. The Office of the Privacy Commissioner publishes guidance on PIPEDA, the Personal Information Protection and Electronic Documents Act, and customer and employee details may be personal information, so ask your lawyer what you may share and when. Our guide to what to share and when sets out one sensible order.

What to have ready

• Financial statements, interim figures and tax returns, which BDC says buyers ask to see.
• A list of live jobs, bookings and repaint contracts, with the paperwork behind each.
• Crew details: roles, tenure, pay arrangements and who holds customer relationships.
• Proof of workers’ compensation coverage and, where it applies, the purchase certificate or clearance.
• Insurance and equipment records, including what is financed.

Plan the handover before the offer

Prepare to explain how your crews, customers and suppliers will be introduced to a new owner. Decide in advance how long you are willing to stay on, what you will do in that time and who will tell the crew. Write down the jobs you have promised that are not yet finished, including start dates and any deposits taken, so the closing adjustments are clear. Check your insurance and any bonding or prequalification you hold with general contractors, and ask each party whether it continues after a change of owner. Ask your lawyer whether the sale needs a non-competition promise from you, and how long and how wide it should be.

Quebec and franchise sellers

If you work in Quebec, the Régie du bâtiment du Québec publishes a page on whether a contractor’s licence is required and a repertory of licence holders, so check what applies to your work and what a buyer would need. If you operate under a franchise banner, read the transfer provisions of your agreement first, because the franchisor’s approval process may set your timetable.