Selling a roofing contractor in Canada

An owner who has decided to sell a roofing company faces a sequence, and the order matters. Records come first, because every later step draws on them. Then comes the choice of what is being sold, then the clearances and licence questions that vary by province, then the work of keeping the sale quiet from crews, suppliers and customers with jobs underway. BDC, the federal development bank, says an accountant helps prepare year-end and interim financial statements and projections, and that a lawyer familiar with business transitions supplies information during due diligence and negotiates the purchase agreement. This guide describes the path. It is not advice on whether to sell.

Assemble the records first

BDC says buyers will ask to look at historic and interim financial statements, projections, tax returns and other records, and that a valuator typically reviews records including a list of employees. A roofer should add what is particular to the trade: a register of open jobs with deposits held, completed-roof callbacks and how each was resolved, installer certifications, safety documentation and the insurance history. Having these in one place before a buyer asks means the questions can be answered from documents.

Decide what is being sold

Selling assets and selling shares move different things. WSIB, Ontario’s workers’ compensation board, says that when you sell shares a new legal entity is not created, so a purchase certificate is not required. Whether a licence or manufacturer certification stays with a company or must be re-applied for by the buyer is a separate question to put to each issuing body before you sign anything. The answer on trade licences when you sell covers the principle.

Request clearances early

In Ontario, 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 amounts the vendor owes up to the date of sale without a valid one, that the request must be made before the date of sale, and that a certificate is valid for 30 days from the date of issue printed on it. WorkSafeBC says a buyer should contact it before buying a firm’s assets, because unpaid premiums may give it a lien on those assets. WCB Alberta says a buyer has a responsibility to get a clearance when buying a business, its stock or equipment. Starting early gives you time to resolve any balance owing. See also what a WSIB clearance certificate is.

Licences that sit outside the sale

Quebec licenses contractors through the Régie du bâtiment du Québec, whose licence page has a section on change of legal status. If your company holds an RBQ licence, ask the RBQ how a sale or restructuring affects it before you set a closing date. Elsewhere, ask the manufacturer programs you belong to whether the certification stays with the company, with named individuals or with the location.

Valuation and tax questions to raise early

Decide early whether you want a valuation report. BDC says that in a family succession or management buyout a valuation report can be useful for discussions about the sale, or in later dealings with tax authorities. BDC also says an accountant can make sure the transaction is structured to minimize the tax liability from the sale. Raise those questions with your accountant before you have a letter of intent in hand. This guide does not say what a roofing company is worth or how a sale should be taxed.

Keep the sale quiet and plan the handover

BDC says word of a sale can get out to employees, customers or suppliers, so decide who learns what and when. The answer on keeping a business sale confidential covers staged disclosure. Plan your own role too. BDC notes that buyers may insist on a reduced price if you cut all ties, and that in a full cash-out the buyer takes on more risk because the seller is no longer involved. Decide how long you would stay, and what you would introduce the buyer to first.

Open roofs deserve their own plan. Be ready to say which jobs are under contract, how far along each is, and who answers for a leak that appears after closing. Decide in advance how you would handle a callback on a roof you finished, and whether you are willing to see an agreed holdback or similar mechanism tied to claims. Put your answers in writing before negotiation begins.

• Gather statements, projections, tax returns and the employee list before approaching any buyer
• Build a register of open jobs, deposits held and unresolved callbacks
• Decide whether you are selling assets or shares, and ask each licence and certification body what follows from that
• Request the workers’ compensation clearance or purchase certificate that applies in your province before the closing date
• Settle how long you would stay on, and in what role, before the first buyer conversation