Selling a snow removal company in Canada

An owner who has decided to sell has a sequence to run. Assemble advisers, put the contracts and service records in order, decide who may learn of the sale and when, deal with the workers’ compensation clearance if your company has an account, and plan how client relationships pass to the buyer. Each step can be started before an offer arrives. This guide follows that order and flags where provincial rules differ. It is general information, and your lawyer and accountant decide how it applies to your company.

Build the team before you build the package

BDC says an accountant is important for preparing year-end and interim financial statements, projections and the documents buyers typically ask to see in due diligence. It also says you need a lawyer familiar with business transitions to supply information to buyers, negotiate the purchase agreement and address legal issues. Add your insurance broker to the list for a snow removal company, so that the insurer’s claims summary and your service documentation are in order. Settle who speaks for you before any buyer calls.

Put contracts and records in order

BDC advises reviewing contracts, leases and business agreements and updating them if needed. For a snow removal company that means each client contract: its term, its billing basis and whether it can be assigned. It also means the service logs for recent winters, vehicle and equipment lists, and open claims. A buyer reading the files should find the same story the financial statements tell. Fix any gaps now.

Confidentiality with clients and crews

BDC warns that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers. Ask any marketplace or adviser how they screen enquirers and what they release before a non-disclosure agreement is signed. Decide in advance what you will tell a long-standing condominium or commercial client who hears about it, so the answer is consistent.

Workers’ compensation clearances differ by province

If the company has a WSIB account in Ontario, WSIB says that anyone selling or purchasing a business’s assets should get a purchase certificate, that it may hold the purchaser liable for amounts the vendor owes up to the date of sale if there is no valid certificate, and that the request must be made before the date of sale. WSIB says a certificate is valid for 30 days from the date of issue printed on it. For a share sale WSIB says no certificate is required, but the share purchase agreement must be submitted. Alberta’s WCB lists a sale of a business under section 132 of its Workers’ Compensation Act among the situations that need a clearance. Other provinces run their own boards, so ask yours what applies. See our entry on the WSIB clearance certificate.

Timing the process around the winter

Ask your advisers whether to start before, during or after a season. Decide in advance how you will show a buyer a winter’s operations: service logs, invoices and, with the client’s permission, a reference or two. Ask your advisers how a closing between seasons would affect the handover of equipment and crews. Check each contract’s notice terms for any notice of a change of ownership.

Handing over the relationships

BDC notes that buyers may insist on a reduced price if you cut all ties, and that staying involved can take forms such as vendor financing, an earn-out or a phased transfer. For a company built on a contract book, a handover period in which you introduce the buyer to clients and crews is worth raising early. Ontario repealed its Bulk Sales Act on March 22, 2017, so ask your lawyer what creditor-notice steps, if any, apply where you are. How the deal is structured also matters; read asset sale versus share sale first.

Answers to prepare

Prepare answers on how clients are billed, what the service logs show, whether any claim is open, and who owns each piece of equipment outright. Prepare a short schedule of the contracts, a summary of claims from your insurer and a list of equipment with any financing against it. If a unit is financed, find out now what the lender requires in order to release its security at closing. Having these ready lets you check them for errors first.

• A named adviser team: accountant, lawyer and insurance broker
• A contract list showing term, billing basis and assignment terms for every client
• Service logs, equipment list and claims summary for recent winters
• A written answer for clients and staff if word of the sale gets out
• Your province’s workers’ compensation clearance steps, confirmed with the board