Selling a landscaping or lawn care business in Canada

A landscaping business is a route of clients, a yard full of equipment and a crew that knows the work. Buyers pay for repeat clients and contracts that keep coming back each season after you leave, so most of the work in selling is showing that the routes, the contracts and the equipment are real and in good shape. Here is what to expect and how to prepare.

What buyers look at first

Most buyers of a landscaping, lawn care or snow removal business ask the same questions early. Have clear answers ready before you list:

• Recurring clients. How many weekly or monthly maintenance clients you have, what they pay and how many seasons they have stayed.
• Contracts. Which commercial, strata and snow clients have written contracts, how long they run and whether they can be assigned.
• The mix of work. How much comes from repeat maintenance and snow compared with one-time design, build and install jobs.
• Equipment. Trucks, trailers, mowers, skid steers, plows and salters, their condition, and what is leased or financed.
• The crew. Who works for you, whether they are year round or seasonal, and who plans to stay.
• You. How many hours you still quote, sell, schedule and work in the field yourself.

Buyers will check these during due diligence, so it helps to gather them now. Our list of documents needed to sell a business is a good start.

Seasonal numbers that make sense

A landscaping business can look very different in July and in January, so buyers want full years. Pull sales by month, and by client for your regular accounts, for the last two or three years, and make sure they match your bank deposits and the sales on your tax and GST/HST returns. Cash jobs that never reach the books cannot be shown, so a buyer generally will not pay for them. If you pay yourself a wage or run personal costs through the business, such as a family truck, list them clearly as add-backs with proof.

A simple table helps a lot: each maintenance and snow client, the visit frequency, the season price and the first year they signed. Show install revenue separately, because buyers treat it as less certain than repeat work. If a bad winter or a wet spring hurt one year, say so and show the years around it. If one strata or property manager makes up a large share of sales, say that early too. A buyer who finds it on their own will trust the rest of your numbers less.

Maintenance and snow contracts

Residential lawn clients are often on a simple agreement or a recurring booking. Commercial, strata and snow removal clients usually have written contracts. In an asset sale those contracts are with you, so each one generally needs the client's consent to move to the buyer. In a share sale the company keeps its contracts, but some include a change of control clause that lets the client end the contract or requires notice.

Read each contract for the season it covers, renewal, notice period and any assignment clause. Snow contracts are often signed in the fall for one winter, so the timing of your sale matters: selling just after renewals are signed is easier to value than selling just before. Where a few clients make up much of the value, buyers often ask that their consent or renewal be a condition of closing, or that part of the price depend on those clients staying, through an earn-out or a holdback. Our guide to transferring contracts, licences and permits has a wider checklist.

Deposits, prepaid seasons and warranties

Many landscapers take deposits for spring install jobs or sell prepaid seasonal packages. That money is for work the buyer will do after closing. Keep a list of every deposit and prepaid amount, with the client, the job and what is left to do. A common approach is for the buyer to take on the work and get a credit on the price for the deposits, so clients are looked after and the buyer is not working for free.

If you guarantee plants, sod or hardscaping for a season or a year, list the jobs still under warranty and agree who handles any callbacks. These items are part of closing day adjustments and are easy to forget until a client calls.

Crews and seasonal staff

Many landscaping businesses have a small year round team and more workers in spring and summer, and some use subcontractors for jobs like irrigation, tree work or paving. A buyer will want a clear list of who is who, pay rates, written agreements and who plans to return next season, because clients often know and trust the crew leads.

Employment law is provincial. In British Columbia, section 97 of the Employment Standards Act says that if all or part of a business is disposed of, an employee's employment is deemed continuous for the purposes of the Act, which can affect vacation and length of service for staff who stay on. Ask your lawyer what you owe on closing, and plan when and how to tell the team. See what to tell employees.

Trucks, trailers and equipment

Equipment is often a large part of the price, so write a full list: each truck, trailer, mower, aerator, skid steer, plow, salter and hand tool set, with the year, hours or kilometres and condition. Service records help a buyer trust the list. Note anything leased or financed, because those agreements need the lender's consent or must be paid out on closing, and the buyer will want clear title. See selling a business with debt. Vehicle ownership must be transferred properly, and the buyer needs their own insurance from closing day.

If you rent a yard or shop, the lease matters too; see the commercial lease guide. Bulk materials on hand, such as mulch, soil, salt and plants, are usually counted on closing day at cost; see selling a business with inventory. Also list the accounts that keep the business running: scheduling and invoicing software, payment processor, website and domain, Google business profile, phone number and supplier accounts.

Pesticide licences, client privacy and clearances

In British Columbia, a business that offers a service applying most pesticides to landscapes needs a pesticide licence under the Integrated Pest Management Act, and to apply for a licence the business needs someone on staff with a valid pesticide certificate in the right category. If weed and pest control is part of your service, tell buyers which licence you hold and who on the team is certified, and ask the Province how the licence is handled when the business changes hands. Other provinces have their own rules, and some cities have pesticide bylaws too.

Client names, addresses, gate codes and billing details are personal information. In British Columbia, section 20 of the Personal Information Protection Act lets a business share personal information about customers and employees with a prospective buyer without consent, but only if it is needed to decide whether to go ahead and the buyer has agreed to use it only for the deal. Many sellers share totals and an anonymous client table first, under a confidentiality agreement, and the full list at closing. Our guide to telling customers when selling covers timing and wording.

Landscaping is physical work, so workers' compensation matters. WorkSafeBC asks buyers to get a clearance letter before buying the assets of a firm, because unpaid premiums can lead to a lien. Keep your account current and expect the buyer to ask for a letter near closing. Other provinces have their own workers' compensation boards.

Tax on the sale

How the sale is taxed depends on whether you sell assets or shares and how the price is split between goodwill, vehicles and equipment. See asset sale vs share sale, goodwill when selling and taxes when selling a business. If you run the business on your own without a company, see selling a sole proprietorship.

For GST/HST, the CRA explains that you and the buyer may be able to jointly elect under section 167 of the Excise Tax Act, using Form GST44, so that no GST/HST is payable on the sale. This generally needs the buyer to get at least 90% of the property needed to carry on the business, and if you are a registrant, the buyer must be one too. In British Columbia, PST generally applies to taxable goods in the sale such as vehicles and equipment, but not to goodwill, and the Province says a buyer should get a PST clearance certificate before buying a business. Alberta has no PST. See GST and PST when selling a business.

A simple worked example

These numbers are made up and rounded for illustration only. Your own deal, timing and tax will differ.

Questions to take to your lawyer and accountant

• Which of my maintenance and snow contracts can be assigned, and whose consent do I need?
• When in the season is the best time to close, given my renewals and deposits?
• How should deposits, prepaid packages and warranty callbacks be handled in the price?
• Which trucks and equipment are leased or financed, and should I pay them out on closing?
• What does the buyer need for a pesticide licence, and are my certified staff staying?
• How should we split the price between goodwill, vehicles, equipment and materials?
• Can we use the section 167 election for GST/HST, and how are PST and WorkSafeBC clearance handled?

For more, read what your lawyer and accountant do. Selling a plumbing, electrical or HVAC business instead? See selling a trades business in Canada. This guide is general information, not legal or tax advice for your situation. Questions about listing with us go to hello@sellmybusinessdirect.com.