Selling a plumbing contractor in Canada

An owner who has decided to sell a plumbing company faces a sequence of steps, and some of them cannot be rushed. A workers’ compensation clearance comes from a board. Tax accounts close through the Canada Revenue Agency. A buyer’s questions about permits and certifications need documents you may not have gathered yet. This guide follows that sequence from preparation to closing. It focuses on what the regulators involved require and how those steps run, not on price. For valuation, see what a plumbing contractor is worth.

Prepare the records before you list

BDC says an accountant helps prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see in due diligence, and that you need a lawyer familiar with business transitions to supply information and negotiate the purchase agreement. In this trade, add the operational file: permit and inspection records for recent installations, the list of open jobs, and certifications held by each technician. Gather them while the business is running normally, so nothing looks hurried.

Confidentiality while you prepare

Decide which customers, technicians and suppliers learn of the sale, what they learn and when. Ask any prospective buyer to sign a confidentiality agreement before you share customer lists or financial detail, and have your lawyer draft it. Share the most sensitive material, such as named commercial accounts and testing contracts, last, and only with a buyer who has shown they can proceed. Keep the first conversations with staff short and planned.

Workers’ compensation clearances

Start with the workers’ compensation board that covers your business. In Ontario, the WSIB says that if you are selling or purchasing a business’ assets, you should get a purchase certificate. It says it may hold the purchaser liable for amounts the vendor owes up to the date of sale if there is no valid 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. Selling shares does not create a new legal entity, so WSIB says no purchase certificate is required for a share sale. Other provinces have their own rules, so ask the board that covers your business.

Tax accounts and the sale structure

The CRA says that if the business you are selling has employees, you must close your payroll account, and that if it has a GST/HST account you must contact your tax services office to close it. It also says you may be able to elect jointly with the purchaser to have no GST/HST payable on the sale, but that the election cannot be made if you sell only one or more assets of your business or if you are a registrant and the purchaser is not. Even with the election, the CRA says you still charge GST/HST on some supplies, such as taxable services to be rendered to the purchaser and taxable supplies of property by way of lease, licence or similar arrangement. Ask your accountant whether it applies before the agreement is drafted.

The licence and certification question

Skilled Trades Ontario’s certification page speaks of journeypersons in compulsory and non-compulsory trades, not of companies. Ask the trades body in your province how your plumbers’ credentials bear on the sale. Check with the trades body and the local building authority how a change in ownership affects permits, and tell the buyer who is certified and who will stay. The related guide on trades licences and transfers covers the wider picture.

• Have the accountant prepare year-end and interim statements and the add-back schedule.
• Collect permit and inspection records and list any open deficiencies.
• List each technician’s certifications and who is staying after closing.
• Ask your province’s workers’ compensation board what clearance it issues and how long it takes.
• Ask your accountant how the payroll and GST/HST accounts close and whether the election applies.

What to have ready for a buyer

BDC says buyers will ask to look at your historic and interim financial statements, projections, tax returns and other records, and suggests reviewing your records with your accountant so interim statements are accurate and projections are realistic. Also have ready the customer and contract list, equipment and vehicle lists with any financing against them, permit history, insurance records and employee information. Answer in writing, and keep a log of what was shared with whom. BDC lists due diligence among the factors that can affect the final selling price, so tell the buyer about open permits and lapsed certifications yourself rather than leaving them to find them. Your lawyer should review every disclosure before it leaves your hands.