Selling an electrical contractor in Canada

An owner who has decided to sell an electrical contractor is selling a business whose licence depends on a qualified person, not just a customer list. That suggests an order of work. The licence question comes first, because it may decide who can buy. Records come next, because buyers ask to see them. Confidentiality runs through all of it, because BDC notes a change in ownership can be disruptive for employees, customers and suppliers. This guide follows that sequence and points to the regulator at each step.

Settle the licence question before you list

In Ontario, the Electrical Safety Authority (ESA) says each applicant for a contractor licence is screened against the Electricity Act and its licensing regulation, and that a licensed contractor must be a Master Electrician or have at least one working for it at all times. ESA’s page describes how to get a licence. It does not say that a licence passes to a buyer. Ask ESA Licensing directly how your deal structure, shares or assets, affects the licence and what must be reported, before you promise a buyer anything. Other provinces run their own regimes. A licence and permit transfer checklist helps you ask the right questions.

Decide what is being sold

Whether you sell shares or assets changes what moves to the buyer, and the WSIB guidance below treats the two differently. With a share sale the company stays the same legal entity. With an asset sale selected assets, such as vehicles, tools and contracts, move to a new owner. Ask your lawyer which structure fits your situation, and ask the licensing body what each one means for the licence, the permits and the insurance. The answers decide what you can tell a buyer about timing. Do not assume they are the same in every province.

Check your workers’ compensation account

In Ontario, the Workplace Safety and Insurance Board (WSIB) says selling a business includes the sale of assets or shares. It says that if assets are being sold or purchased, you should get a purchase certificate, and that it may hold the purchaser liable for amounts the vendor owed up to the date of sale if there is no valid certificate. The request must be made before the date of sale, and a certificate is valid for 30 days from issue. WSIB also says a share sale does not create a new legal entity, so no certificate is required, though the Share Purchase Agreement must still be submitted to it. Other provinces run their own boards and rules.

Assemble what a buyer may ask to see

BDC says buyers ask to see historic and interim financial statements, projections and tax returns, and recommends documenting standard operating procedures so operations transfer more easily to a new owner. For an electrical contractor, add the records that prove the work was done properly. In British Columbia, Technical Safety BC says an operating permit means appropriate records are maintained and available to its safety officers on request. Pull your own permit and inspection history now. If there are gaps or open deficiencies, it is better to know before the buyer does.

Clear what you own

Service trucks and test equipment are the physical assets a buyer may ask about. Ontario’s Access Now service lets you find out whether a lien has been filed against personal property in the Personal Property Security Registration system. Search your own company before a buyer does. If a lender holds a claim on equipment that is part of the sale, ask the lender what it needs in order to release the claim at closing, and build that into the timeline rather than discovering it in the final week.

Keep it confidential

BDC warns that, depending on a business-for-sale website’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. For a contractor, those groups are your electricians and your general-contractor customers. Use a signed confidentiality agreement before sharing names, customer detail or financials, and decide in advance who on your team learns of the sale and when. See how to keep a business sale confidential and the confidentiality checklist.

Plan your own exit

BDC says a buyer may insist on a reduced price if the seller cuts all ties, and suggests a plan for retaining employees, customers and suppliers and for communicating the change. Decide how long you will stay, what you will do to introduce customers, and how the licensed person is replaced. In British Columbia, if your company holds an operating permit for a site it will no longer be responsible for, Technical Safety BC provides a Change of Ownership form.

• Ask the licensing body how your deal structure affects the contractor licence.
• Request any WSIB purchase certificate before the sale date, not after.
• Pull your own permit and inspection history and fix open deficiencies.
• Confirm which customer agreements can be assigned and which need consent.
• Agree who on your team is told about the sale, and when.