Selling a tree care and arborist company in Canada

You have decided to sell. Plan for the preparation between that decision and closing: the Business Development Bank of Canada (BDC) says a lot of people underestimate how long it takes to prepare a business for sale, especially when there are issues to fix. The sections below follow one workable order: records first, then the claims others may have on your assets, then the contracts and people, then the filings that follow a sale.

Get the records a buyer will ask for

BDC says buyers will ask to see historic and interim financial statements, projections, tax returns and other records, and that an accountant can help prepare them. For this kind of company, add a record of every job type you do, a contract list with end dates, a list of crew with the credentials each holds, and an equipment schedule. Review all of it with your accountant before a buyer does. Reconcile the owner’s pay, personal expenses run through the company and any one-time storm work, so the earnings you show are the earnings you can defend. Note too which records live only in the owner’s head, such as customer histories and pricing habits, and write them down in a handover document a buyer can read.

Clear the workers’ compensation account

Check what the workers’ compensation board in your province requires. In Ontario, the Workplace Safety and Insurance Board (WSIB) says that if you are selling or purchasing a business’s assets, you should get a purchase certificate, that it must be requested before the date of sale, and that it may hold the purchaser liable for all amounts the vendor owed up to the date of sale if no valid certificate is obtained; WSIB also says a share sale does not require one. WorkSafeBC, in British Columbia, says that if a seller owes unpaid premiums, the firm’s assets may be subject to a lien in its favour. Ask your board what applies to your sale, and how long a clearance stays valid; WSIB says a purchase certificate is valid for 30 days from its issue date, so time the request to your closing.

Know what is registered against your trucks and chippers

Ask what a buyer’s lender will want done about any claim registered against the equipment, such as having it paid out at closing. Ontario’s Access Now service lets you search for a lien filed in its personal property registry, and Alberta and British Columbia run their own registries. Search your own company name and the serial numbers of your major equipment before a buyer does. If a lender holds a security interest, ask that lender what it needs to release it, and when. BDC notes that, depending on the terms of the purchase agreement, you may need to repay outstanding financing. Ask your own lender for a payout statement so the figure is ready, and ask whether a lender holding a claim on a truck will release it on closing day or needs earlier notice. Write down every lender and lessor with a claim on any machine, so none is missed when the closing funds are divided.

Review contracts, crew and confidentiality

Read each utility, municipal and commercial agreement for notice, consent and assignment terms, because a contract may need the other party’s approval before it can pass to a buyer. Decide who on your crew needs to know and when, and who will answer customers’ questions once the news is out, since BDC says that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. Ask each prospective buyer to sign a confidentiality agreement before you share names or financials. Talk to your lawyer about how any non-competition promise would be written. Keep a log of who has received what and when, so you can show a buyer that information was shared only with people who signed.

Plan the tax and payroll steps

The Canada Revenue Agency (CRA) says that if the business you are selling has employees you must close your payroll account, and if it has a GST/HST account you must contact your tax services office to close it. It also says that you may be able to jointly elect with the purchaser to have no GST/HST payable on the sale, and that you may have a recapture or a terminal loss of capital cost allowance on the sale of your assets. Your accountant should model these before you accept an offer.

• Gather financial statements, tax returns, a contract list and an equipment schedule, and review them with your accountant.
• Request the workers’ compensation clearance or purchase certificate your board requires, in time for closing.
• Search the personal property registry for your company name and equipment serial numbers.
• Read every major contract for consent and assignment terms.
• Have your lawyer draft the confidentiality agreement and review the purchase agreement.