Selling a residential renovation contractor in Canada

An owner who has decided to sell a residential renovation company is selling a set of habits, not a building. Ask yourself whether sales, design, scheduling and site supervision would continue if you stepped back. One workable order is to start with the parts of the business that are tied to you personally, then deal with the paperwork on open projects, then the clearances and licences that depend on your province, and only then approach buyers. This guide follows that order. It is general information about the process, and it does not say what your company should sell for or whether you should sell.

Start by moving the business off your name

Look at where your reputation lives. If online reviews, social media accounts, the website and the phone number sit under your own name or personal email, work out how they would pass to the company. Move what you can into the company’s name and accounts well before a sale. Also start documenting how a lead becomes a signed contract, and let another person lead some consultations. BDC notes that a buyer may insist on a reduced price when a seller cuts all ties, and that a seller can stay involved through vendor financing, an earn-out, a phased transfer or a role in the company.

Put open projects and deposits in order

Open jobs need their own preparation. For each, collect the signed contract, the schedule of deposits and progress payments, change orders, permits and inspection records, and notes on any complaint. Know how much of your cash balance is deposits for work not yet built. If a project is behind or disputed, decide before listing whether to finish it, settle it or disclose it. A clear schedule of each job is easier to defend than a story told from memory.

Check the clearances that follow your province

Workers’ compensation clearances can matter in a business sale. In Ontario, the WSIB says that if you are selling or purchasing a business’s assets you should get a purchase certificate, that it may hold the purchaser liable for all amounts owed by the vendor up to the date of sale if no valid purchase certificate is obtained, that the request must be made before the date of sale, and that the certificate is valid for 30 days from the date of issue printed on it. The WSIB also says that when shares are sold, no new legal entity is created, so a purchase certificate isn’t required. Outside Ontario, ask your province’s workers’ compensation board what it requires of a seller, and when.

Understand what your licences do and do not carry

Ask your province and your municipality what licensing applies to residential renovation. In Quebec, the Régie du bâtiment du Québec issues contractor licences, publishes a repertory of licence holders and has sections on licence security and a guarantee plan. If you hold an RBQ licence, ask the RBQ how a change of ownership affects it before you tell buyers anything. In Ontario, the Electrical Safety Authority states that only electrical contractors it licenses may do electrical work for hire, so an electrical subtrade’s licence is worth confirming. Your licensed subtrades also keep their own licences. Have their details ready, and know which ones are current.

Decide how long you will stay

BDC lists your post-transaction involvement in the company among the factors that can affect the final selling price. BDC describes several ways a seller can stay involved, among them vendor financing, an earn-out, a phased transfer of ownership, or a role as executive, board member or advisor. Decide before you meet buyers what you are willing to do, for how long and on what terms, and write it down. Put it as a specific offer, such as introducing clients, training a successor in sales and handing over subtrade relationships, rather than an open-ended promise.

Keep the sale confidential

Decide how crew members, subtrades and homeowners with open projects will be told about a sale, and when. Use a confidentiality agreement before sharing names, financials or contracts, and share client detail in stages. Decide in advance who on your team learns about the sale and when. A lawyer familiar with business transitions can handle what buyers ask for in due diligence and negotiate the purchase agreement, as BDC points out.

Be ready for the buyer’s requests

BDC notes that buyers typically ask to see year-end and interim financial statements and projections as part of due diligence, and that an accountant can help prepare them. For a renovator, also prepare a list of open projects with deposits received, subtrade agreements and licence details, insurance and workers’ compensation records, permits for past work, and a history of complaints and warranty callbacks. Think about how long you are willing to stay and what you will be paid for it.

• Review accounts, domains, phone numbers and social media moved into the company’s name
• A project file for each open job, with contract, deposits, change orders, permits and inspections
• A written statement of the deposits held for unfinished work
• Your province’s workers’ compensation clearance or purchase-certificate process (in Ontario, requested before the date of sale)
• A list of the licences held by the company and by each licensed subtrade, with current status