Selling a web development agency in Canada

An owner who has decided to sell a web development agency may expect the hard part to be finding a buyer. Deals can slow down on handover mechanics: who actually controls the client accounts, whether the code can be shown to belong to the company, and whether the client contracts can move. All of that can be fixed before you list, and the order matters. Account control comes first, because it can be fixed soonest. Ownership paperwork comes second. Decisions about what clients and staff are told, and when, come last. Brokers who handle technology and service businesses can help sequence this, and a lawyer should draft the transfer documents.

Move every account into the company’s name

Start with an inventory of every account the agency touches: domain registrars, DNS, hosting, the partner programs of the platforms you build on, payment gateways, email-sending services, analytics and code repositories. For each one, record who holds the login, whose card pays and where the two-factor device lives. Domain names and social accounts are registered to a specific account holder with specific credentials, and registrars and platforms do not know a sale has happened unless someone updates the registration. Treadstone Law notes that a domain transfer usually means updating the registrant and administrative contact and, if the buyer is changing registrars, passing on the transfer authorization code, and that founders sometimes keep two-factor authentication tied to personal devices. Do this before listing rather than at closing, because an account held personally is one a buyer may either price down or make a condition of the deal.

Put the ownership paperwork behind the code and design

A buyer may ask who owns the templates, themes and custom code, so settle it before they do. Under the Copyright Act, an employer is first owner of what an employee employed under a contract of service or apprenticeship makes in the course of that employment unless there is an agreement to the contrary, but any assignment of copyright is valid only if it is in writing and signed by the owner or the owner’s duly authorized agent. Freelancers and former contractors therefore need signed assignments rather than a shared understanding, and developers, designers and copywriters may be asked to waive moral rights, which cannot be assigned. The Canadian Intellectual Property Office explains the difference between an assignment, which transfers some or all of an owner’s rights, and a licence, which gives permission while the owner keeps ownership. Sort your assets into those you own and those you merely license, because under a licence the owner keeps ownership.

Decide how client information is shown to buyers

A client list becomes personal information as soon as it names individuals, and an agency may hold more: form submissions, customer records on hosted sites, staff contact details. Under PIPEDA, parties to a prospective business transaction may use and disclose personal information without the individual’s knowledge or consent if they have an agreement requiring the recipient to use and disclose it solely for purposes related to the transaction, to protect it with safeguards appropriate to its sensitivity and, if the deal does not proceed, to return or destroy it within a reasonable time, and the information is necessary to decide whether to proceed and, if so, to complete the transaction. Quebec’s Commission d’accès à l’information describes a comparable rule, in place since September 2022, allowing a business to communicate personal information without consent, on certain conditions, when that is necessary to conclude a commercial transaction. A seller can stage disclosure, keeping client names masked early and releasing detail once a buyer has signed a confidentiality agreement. See also how to keep a business sale confidential.

Get the retainer base into readable shape

The recurring part of the business is only as convincing as its paper. An agency may bill maintenance on an informal understanding, and moving those clients onto signed agreements with a defined scope, a term and a notice period can be a useful preparation step. Start early. A retainer signed just before listing may prove little, and clients pushed onto new terms just before a sale may cancel instead. Whether a client contract can pass to a buyer without the client’s agreement depends on its own wording, and some contracts require consent, so review the assignment and change-of-control clauses now. The answer on whether contracts transfer in an asset purchase sets out the structure.

Deal with technical debt before a buyer finds it

An inventory of the platform version, plugins, themes and hosting for every client site is worth building before you list. Sites on unsupported versions or with unpatched plugins are a form of technical debt, and finding it during diligence can read as concealment even when it was simply neglect. Sellers have two honest choices: fix the worst sites, or disclose them with a remediation plan and an estimate of the work. Either is better than a buyer’s own audit uncovering what the disclosure never mentioned.

If the agency has Quebec clients or staff

Quebec adds its own layer. The Office québécois de la langue française publishes the francisation process for businesses that employ 25 or more people in Quebec, along with its guidance on displaying trademarks and business names, and the Commission d’accès à l’information sets out Law 25 duties on privacy policies, incident registers and tracking technologies. A buyer of an agency with Quebec exposure may ask what the agency has done on each, and whether any client work was built to a French-language or privacy requirement the agency promised. Collect that evidence before it is requested, and put questions about which duties apply to a given business to Quebec counsel.

What can delay a close

• A domain, hosting or platform account that only a departed employee or the founder personally can open
• Contractor work with no signed assignment, discovered when the buyer’s lawyer asks for the chain of title
• Client contracts that need consent to be assigned, with no plan for asking
• Retainers that turn out to be informal, so the recurring revenue in the offer shrinks during diligence
• Key staff or clients learning of the sale from someone other than the owner

After signing: the handover

A web agency can change hands in stages. A transition period can have the seller introduce the buyer to clients, walk the team through the undocumented quirks of the portfolio and stay reachable for questions. Its length, any consulting fee and any non-compete or non-solicitation covenant are negotiated terms. Agree the client announcement with the buyer, and have the conversation with staff first, since they may hold many of the relationships a buyer is paying for.