Selling an ISP or rural broadband provider in Canada

An owner who has decided to sell a rural broadband business meets an unusual order of operations. A buyer’s first questions here may be about permission: who has to agree before the network and its subscribers can change hands. Funders, site owners, upstream suppliers and regulators may each hold a piece of that answer, and their timetables are not the seller’s to set. An owner can build that list before speaking to any buyer, fix what can be fixed, and decide in advance what to disclose and when. This guide follows that sequence and flags points where the sale of a provider like this can slow down.

Start with a consent schedule

A consent schedule is one list of every agreement and approval that touches a change of ownership, with the counterparty, the relevant clause and what is required. For a provider it can include any funding or subsidy agreement, tower and site leases, easements and right-of-way agreements, upstream and backhaul contracts, the regulatory authorizations the network relies on, and the larger customer contracts. Whether each item needs consent, notice or nothing depends on its wording and on whether the deal is an asset sale or a share sale, which is why asset sale versus share sale is a structuring conversation to have with a lawyer early. A funder’s review may not run to the seller’s timetable, which is one reason this list comes before the marketing.

Document the network before a buyer asks

A buyer of an infrastructure business can price what it can verify. An asset register listing each tower site, cabinet, cable or fibre route and major piece of radio or core equipment, with its age and last service date, turns a vague claim of good condition into something a buyer can check. As-built route maps and records of outages and repairs do the same. BDC notes that an owner will not get full value if equipment is not being maintained, so an honest account of deferred work, with a plan or a price adjustment for it, is easier to defend than a buyer discovering it. BDC also says accountants help prepare the statements buyers typically ask to see and lawyers supply information to buyers during diligence, and both are easier to brief when the records already exist.

Protect the subscriber file

The subscriber list is a valuable asset and one a seller should release last. It is personal information, and the fair information principles in PIPEDA include consent, limiting use and disclosure, and safeguards. Early rounds can run on aggregated figures, with named records released to a serious buyer, under a signed NDA, near the end. Before that, check your own house. The Office of the Privacy Commissioner says an organization must keep a record of every breach of security safeguards involving personal information under its control, whether or not it posed a real risk of significant harm, so a seller should know that record is complete. If any subscribers are in Québec, Québec counsel can confirm which privacy rules govern the file.

Keep the sale quiet in a small community

In a small community, staff, tower landlords and larger customers may know one another, and word that a provider is for sale can travel faster than any announcement. Decide who inside the company needs to know and when, and prepare a plain answer for the question nobody wants to be asked first. A blind listing lets buyers see what the business is without learning who owns it; how a blind listing protects confidentiality explains the mechanics, and the confidentiality checklist covers the rest of the sale.

What can delay the close

Delays can come from approvals the seller assumed were routine.

• A funder’s consent that is required for a change of ownership and is not in hand when every other condition has been satisfied.
• An easement or site agreement that turns out to need the counterparty’s agreement to continue, or that nobody can find in signed form.
• A neighbouring or national buyer whose purchase draws competition review. The Competition Act requires some mergers to be notified before closing depending on financial thresholds and other criteria set out in the Act, and the Competition Bureau says it may challenge a merger that was not the subject of a notification or an advance ruling certificate request for up to three years after closing.
• A foreign-owned buyer, since the Investment Canada Act allows the government to review foreign investments of any size on national security grounds.
• Cutover work after signing. The CRA’s guidance for sellers covers the business number, payroll and GST/HST accounts, and changes of owners or directors.

Where brokers fit

Business brokers are partners in this, not rivals. A broker with relationships among regional providers and infrastructure investors may be able to reach buyers an owner does not know and to run a structured process around the approvals described above. Deavo is a listings platform, not a brokerage: it does not represent either party or take a success fee, so owners choosing between a broker and selling directly are choosing how much of the process they run themselves.