Selling a pest control company in Canada

You have decided to sell. The work now is order: what to prepare, who to talk to first, and when each customer and technician hears about it. A pest control company has features that shape that order. Its customers are households and businesses whose details sit in your records, its work may need licences you have to confirm with your province, and part of what you are selling is a schedule of repeat visits that has to keep running through the sale. This guide follows the sale in sequence and says plainly where you should confirm a rule with your own province rather than rely on a general statement.

Assemble your advisers before the buyers

BDC says an accountant helps prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see during due diligence. It adds that you will need a lawyer familiar with business transitions to supply information to buyers and negotiate the purchase agreement. Your banker can help too, including with funds for vendor financing. Decide your goals first. BDC notes that being clear on them helps you structure and prepare for a transaction that satisfies your needs, and that taking the right steps early can help with price and with tax costs.

Talk to the regulator before you list

Find out which provincial authority licenses pest control work where you operate. Before you approach buyers, ask that regulator what happens to the company’s licence and to each technician’s credentials when ownership changes, whether any filing or notice is required, and how long it takes. Get the answer in writing if you can. If a buyer could not lawfully operate on day one, the route could not be served, so this step shapes both the timetable and the structure of the deal, including whether an asset purchase agreement or a share sale fits better.

Protect customer information as the sale proceeds

Your customer list is personal information if it names households. Under PIPEDA section 7.2, parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if the conditions in that section are met. Those include an agreement that requires the recipient to use the information solely for purposes related to the transaction, to protect it with security safeguards appropriate to its sensitivity and, if the deal does not proceed, to return or destroy it within a reasonable time, and that the information is necessary for the decision to proceed and, if it does, to complete the deal. Under section 7.2(4), the section does not apply to a business transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information. Check which privacy law governs your records in your province, and release customer details in stages rather than all at once.

Plan what employees and customers hear, and when

BDC warns that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. Decide in advance who is told, by whom and on what date, and what each group is told. Decide what you can tell technicians about their jobs and customers about whether service continues on the same schedule. In British Columbia, the Employment Standards Act deems an employee’s employment continuous and uninterrupted, for the purposes of that Act, when all or part of a business is disposed of, and the province’s interpretive guide says the purchaser must treat the employees as though their employment is continuous. Other provinces have their own rules, so ask your lawyer how staff are treated where you operate before you promise technicians anything about their jobs.

Clear the tax and corporate housekeeping

The CRA says that if you sell a business with employees you must close the payroll account, and that you must contact your tax services office to close a GST/HST account. It also publishes form GST44, which is used to elect to have GST/HST not apply to the sale of a business or part of a business. Whether the election is open to you depends on the conditions on that form, so have your accountant confirm it. If your company is federally incorporated, Corporations Canada’s guidance says most corporations created under the Canada Business Corporations Act must keep a register of individuals with significant control and update it at least once a year and within 15 days of becoming informed of any changes affecting it. If the sale changes who controls the company, ask your lawyer whether that register needs updating. Ask the same lawyer to list every other corporate record the sale changes.

Decide what you will do after closing

BDC says buyers may insist on a reduced price if you choose to cut all ties, and describes vendor financing, an earn-out, a phased transfer of ownership or a role as an adviser as ways to stay involved. If a buyer asks for a non-compete, have your lawyer read its scope, length and territory before you agree. If you operate under a franchise banner, read your franchise agreement for any approval the franchisor must give a buyer, and raise any approval requirement early, since it may affect whether and when your buyer can close.

• Write down the order of disclosure: advisers, regulator, the first buyer conversations, staff, then customers
• Prepare statements, interim results and projections with your accountant before any buyer sees a number
• Ask the regulator in writing what a change of owner requires for the company and for each technician
• Stage customer information releases and record what each party received, so it can be returned or destroyed
• Confirm with your lawyer and accountant who closes the payroll and GST/HST accounts and when