Selling an elevator service company in Canada

An owner who has decided to sell has a different task from one still wondering about price. The work is sequence: what to assemble first, who to tell and when, and what the regulator needs once a buyer is chosen. Much of what you will be asked about sits in records. The maintenance agreements, the mechanics’ certifications, the manufacturer arrangements and the inspection history all have to be findable and consistent. This guide follows the order of work. It is general information and not advice on any particular sale, and the rules that apply to you depend on your province and on how the deal is structured.

Assemble the contract book first

Start with a schedule of every maintenance agreement: the building, the counterparty, the start and end dates, the renewal terms and any clause about assignment or a change of control. Read each for whether the other party must consent before it can move to a new owner. A change-of-control or assignment clause that you discover late could delay a closing. Fix missing signatures and out-of-date agreements now, rather than leaving a buyer to find them. BDC notes that a lot of people underestimate how long it takes to prepare a business for sale, so start the schedule well before you intend to go to market.

Know what the regulator needs

In Ontario, the Technical Standards and Safety Authority publishes a change-of-ownership page. It says licences are not transferable and that the application for a new licence falls on the new owner, and it lists an application for an elevating device licence ownership or licensee change that goes through the TSSA client portal. Other provinces run their own regimes and name different bodies. Quebec’s Régie du bâtiment du Québec, for example, publishes a licence holders’ repertory and licence security rules. Ask your regulator in writing what a change of ownership requires, how long it takes and whether it can start before closing. Ask what happens to a device’s paperwork between the sale date and the date the new owner’s application is processed, and get the answer before you agree a closing date with the buyer. If the regulator needs the buyer’s qualifications reviewed first, the closing may have to wait for that review.

Keep it confidential

Building owners and property managers sit behind your agreements, and your mechanics’ jobs depend on the company. Think about how word of a sale could reach both. Decide who is told and when, require a signed confidentiality agreement before anyone sees named contracts, and consider showing contracts with the building names removed until a buyer is serious. How to keep a sale confidential sets out steps to consider.

Prepare for the buyer’s questions

Be ready to say who on your team holds which certifications and whether they will stay, which devices depend on a manufacturer’s parts or software, and what happens to those arrangements on a sale. Gather the answers and the documents behind them. Where your answer is that the manufacturer’s consent is needed, say so and say what you have done to ask. Be ready to answer questions about incidents, open deficiencies and any unresolved claim involving a device you serviced. BDC says an accountant helps prepare year-end and interim financial statements, projections and other documents that buyers typically ask to see in due diligence, so bring your accountant in before the first buyer conversation, not after it.

• A contract schedule showing term, renewal and any assignment or change-of-control wording
• A mechanic roster with each person’s certification and length of service
• Written manufacturer or parts-supplier arrangements, and whether each can be assigned
• Inspection, deficiency and incident records for the devices you maintain
• Your regulator’s written answer on what a change of ownership requires

Decide how involved you will stay

BDC lists vendor financing, an earn-out, a phased transfer of ownership and a role as an advisor among the ways an owner can remain involved after a sale. For an elevator service company that choice has a practical side: the building owners and the mechanics know you, and a handover period can let the buyer meet them with you present. Decide what you are willing to offer before the first meeting and put any role in the written agreement, with its length and what you will be paid, so that it does not rest on goodwill.

Ownership changes beyond the safety regulator

If the buyer is purchasing assets in Ontario, the Workplace Safety and Insurance Board says on its buying-or-selling page that it may hold the purchaser liable for amounts the vendor owes up to the date of sale without a valid purchase certificate, and that the request for the certificate must be made before the date of sale. Other provinces have their own boards and procedures. The board describes the certificate as verifying that the selling company has coverage and no outstanding debts on its account, and it is valid for a limited period, so timing matters. Raise this with your lawyer early.