Selling an equipment hauling company in Canada

An owner who has decided to sell a heavy-haul business has three things worth getting onto paper early: the permit and routing know-how, the dealer and contractor relationships, and a safety record that can be looked up. Preparation is mostly about moving those things out of the owner’s head and onto paper before a buyer starts asking, while keeping the sale quiet enough that customers, drivers and escort vendors do not hear it from someone else. This guide follows the order of work, from the first records to closing.

Document what only you know

Start with the process a buyer cannot see from the financial statements. Write down how a move is quoted, which permit offices are involved, who prepares applications, how routes for bridges and corridors are chosen, and how pilot cars or escorts are arranged. If a vendor relationship is only a handshake, put it in a short written agreement that carries over to a new owner, or note plainly that it does not. Include the standing steps your dispatcher takes when a permit is delayed or a route is refused, since that is where experience shows. Name a second person who can cover each step during the sale. BDC says buyers may insist on a reduced price if the seller cuts all ties, so show a buyer how the business runs without you.

Read your own record before a buyer does

Ontario makes a summary of a carrier’s record, the Level 1 abstract covering a two-year period, available to the general public. A more detailed Level 2 record, covering collisions, convictions and inspections over five years, is a product for carriers only. Order yours and read it as a buyer would. Ontario also says the safety rating is available to the public. If something in the record needs explaining, prepare the explanation now. Outside Ontario, ask the provincial regulator what a buyer can see about your operation.

Settle the structure, then tell the regulator

Ontario defines a CVOR operator as the person or corporation responsible for the operation of the commercial motor vehicle, driver and goods or passengers being transported, so ask each regulator whether the choice between selling assets and selling shares changes what has to be re-established. In Ontario the operator must notify the Ministry of Transportation immediately about CVOR changes, such as names, addresses, fleet data and changes in corporate officers. In Alberta, a carrier whose corporate name changes must amend the name on its Safety Fitness Certificate, and a change in operating status may bring different regulatory requirements. Ask the regulator in each province you operate in what it needs, and in what order, before the closing date is fixed.

Keep the sale confidential and the relationships warm

Treat customer names and rates as confidential. Have a lawyer prepare a confidentiality agreement for any buyer before customer-level detail is shared, and decide with your advisers when and how dealers, rental companies, contractors and key staff will be told. Plan the handover of each major relationship so it does not hinge on one phone call after closing. Keep a log of who received which documents and when, so you can show a buyer or a customer exactly what was shared. BDC observes that in a 100%-cash-out deal the buyer takes on more risk because the seller is not involved any more, and it advises working out a transition plan with the buyer.

What the buyer will ask for

BDC lists what buyers ask to see: historic and interim financial statements, projections and tax returns, with an accountant preparing the financial side and a lawyer supplying information during due diligence. For a hauler, also have ready a trailer schedule, the carrier record, inspection certificates and customer revenue. In Alberta, commercial vehicles must hold a valid inspection certificate and decal, so bring those current before the file goes out. See what a buyer verifies for the buyer’s side of the same list.

Closing steps with the tax agency

The Canada Revenue Agency says a sale agreement may set a price for each asset, a value for inventory and an amount for goodwill, and that selling assets can produce a recapture or terminal loss of capital cost allowance. It also says that you might have to cancel the business number, that if the business has employees you must close the payroll account, and that if it has a GST/HST account you must contact your tax services office to close it. In some sales you may be able to elect jointly with the purchaser to have no GST/HST payable, but that election cannot be made if you sell only one or more assets of the business, or if you are a registrant and the purchaser is not, and some supplies still carry GST/HST. Take the allocation to your accountant before you sign.

• A written permit and routing procedure, with named people for each step
• Written terms for escort and pilot-car vendors, or a clear note that none exist
• A current carrier record and an explanation for any incident in it
• A trailer schedule and up-to-date inspection certificates for every unit
• A plan for introducing the buyer to each major customer after the agreement is signed