Selling a school bus contractor in Canada

An owner who has decided to sell a school bus company is selling a set of agreements with school boards or transportation bodies, backed by buses and licensed drivers. The sequence matters, because the party that holds the agreements may have a say in who takes them over, and the drivers who run the routes may be the people most affected by news of a sale. This guide follows the order of work: understand what the agreements allow, put the records in order, decide who learns what and when, and be ready for the buyer’s questions. The details of consent and rebidding differ by province and by contracting body.

Start with what the agreements allow

Before you speak to anyone, read every route agreement for its assignment clause (see assignment clause), any change-of-control wording and the term that remains. An asset sale moves the contracts one by one, so check whether each needs the contracting party’s consent. A share sale leaves the company as the contracting party, but check whether any agreement treats a change of owner as needing approval anyway. Do not assume either route is easier. Have a lawyer read the wording, and then decide the structure with an accountant, because the tax result and the consent result may point in different directions.

Put the regulatory record in order

In Ontario, a carrier’s safety performance is recorded under its CVOR certificate, and the ministry says an abstract summarizes collisions, convictions and inspections. The ministry also lists notifying it immediately about CVOR changes such as changes in corporate officers. If a sale changes officers or addresses, confirm the steps with the ministry. Transport Canada says provincial and territorial regulations govern the operation of the commercial bus and truck industry, except for the rules its Motor Carrier Division sets for federally regulated (extra-provincial) carriers, and that the National Safety Code was developed by the federal, provincial and territorial governments. Find your province’s equivalent and confirm what must be updated on closing.

Drivers, confidentiality and timing

Tell the fewest people possible, for as long as possible. Drivers hold credentials that a rival could try to recruit, and a contracting body may react to a sale rumour by asking questions you are not ready to answer. Use a confidentiality agreement with every prospective buyer before releasing route-level detail. Decide in advance who will speak to the contracting body, and when, so that it hears about the sale from you and with a plan. Ask your lawyer whether any agreement requires notice before you start talks.

What the buyer will ask for

Prepare the agreements, the fleet list with inspection and maintenance records, the driver roster with licence class and course certificate dates, the CVOR abstract and carrier record, and financial statements. BDC’s guide to selling notes that a sale can be the largest financial transaction an owner ever makes, which is a reason to prepare rather than react. Where you cannot produce a record, say so early and explain why. Raise any gap yourself rather than leaving the buyer to find it. Keep a short log of every document you hand over and to whom, so that you can show later exactly what was disclosed, and ask your lawyer how to handle a question you cannot answer yet.

Choosing the structure with advisers

Decide early whether you are offering assets or shares, because it changes the consent steps, the tax result and what stays with you after closing. In a share sale, the buyer takes the company with its history, so ask your lawyer what assurances about past conduct a buyer could seek. In an asset sale, you keep the company and its past liabilities, but the contracts must be moved one by one, so ask what registrations and licences the buyer needs in its own name. Ask your lawyer and accountant to compare the two for your agreements, and read asset sale vs share sale before the first meeting.

Closing and the handover

Plan what happens on the day the routes change hands. The drivers need to know who employs them and whether their pay and seniority continue, and the contracting bodies need a contact for the new owner. Agree in the sale documents what you will do after closing, such as introducing the buyer to each body or staying on for a short period, and what happens if a consent is still outstanding on closing day. A written plan avoids a gap during which nobody is sure who is responsible for a route.

• Read each agreement for term, renewal, assignment and change-of-control wording before approaching a buyer.
• Pull the CVOR abstract and carrier record, and settle how any entry will be explained.
• Build the driver roster with licence class, course certificate dates and hire dates.
• Organise fleet records by unit: model year, inspections, repairs and lien status.
• Decide who tells the contracting body, when, and what you will ask it to confirm in writing.