by Kevin Marois
a Boiler Operator’s certificate. Check on your provincial rules, as they may vary.
What about the Equipment? BUYING AND SELLING
Whether you are buying or selling a business, you need to consider the equipment and how it affects your sale.
YOUR LEGAL REQUIREMENTS As a seller, you need to provide an accurate equipment list: make, model and serial number. Put everything on paper – then the buyer and seller both know exactly what is being sold.
When you buy equipment, you need to confirm whether there is a lien against the equipment. A bank or leasing company may have registered a lien against that machine. You don’t want to be responsible for that. Your lawyer should be able to confirm that all the equipment is ‘free and clear’.
EQUIPMENT WARRANTY – ‘OPERATING ON POSSESSION DAY’
Most Buy/Sell agreements specify that the equipment must be running on Possession Day. It may not run next week, and that is now your problem if you are the buyer. It is rare that the seller will put a warranty on equipment he is selling, though if it is newer and the seller is confident of the maintenance he has been doing, he may put a short warranty on it.
Sometimes a plant location is bought strictly to operate
as depot. If that is the plan, then as the seller your only concern is disposing of the equipment. What will that cost you and does the equipment have any value?
The plant you are buying or selling may have some leased equipment. Most equipment leases can be paid out early but there is no advantage to do so. An equip- ment lease is based on an agreed number of payments. The total is the same whether you pay it on time or early.
Some people lease new equipment before selling their plant. Buying new equipment may not add an equivalent amount of value to the business so the seller might lose value that way. Leasing a machine, it will increase the perceived value of the plant without the owner having to pay the full amount of that value.
BOILER REGISTRATION All boilers in Alberta are registered with ABSA. When a boiler is sold, the owner must fill out the appropriate form (AB-10) to transfer the ownership of the vessel. If you bought the shares of the company, you don’t have to send in the form – the boiler is still owned by the same company. A new owner is also required to have
18 FABRICARE CANADA May/June 2016
INSPECTION Get a professional inspection before the sale. A service com- pany may know the history of those machines, and what problems you could expect. You buy the business thinking everything is wonderful; avoid nasty surprises with a good inspection.
Beware of shiny paint – especially if you are new to the industry. You may not be aware of problems that would be obvious to anyone with experience. Someone who has been planning to sell for a few years may not have replaced any machines or done much maintenance for a while. Don’t be surprised if you have to upgrade one or two machines. Also, most new owners have no concept of the amount of maintenance it takes to keep a plant running.
APPRAISAL BEFORE THE SALE Most owners can tell you how much they want for their store and equipment. Their assess- ment of the value is probably incorrect. If there is a sub- stantial discrepancy between the seller’s estimate and the buyer’s appraised value, the buyer may be able to negotiate a lower price. Even if he can’t get a lower price, at least he will be entering the agreement with a clear understanding of the equipment value.
Buyers should ask who sells the machines, and if parts are still available. Parts may have to come from overseas with a pre- mium price and slow delivery. Many U.S. manufacturers are able to ship a part out the same day, and a good mechanic can have you running the next day.
LIABILITY – ANY EQUIPMENT MODIFICATIONS OR SAFETY CONCERNS
If you are selling, have you made any modifications to your machines? You may have done something 10 years ago. Remember when you switched the wires so the ironer pedal on the left is actually steam, even though it says vacuum?
If the new operator steps on the ‘wrong’ pedal and is badly burned, you are liable because you modified the press. Are there guards that have been removed from the machines? Do all the emer- gency stop buttons work prop- erly? You might be better off to scrap that machine rather than sell it with the business.
LIABILITY – CONTAMINATION
What about soil or ground water contamination? If you ever had a perc machine and contamination is found, you will be implicated. You need competent legal advice on this topic. If you do testing, you may be able to prove the site was clean when you left. But if you do testing and perc is found, what must you do then?
Many of the plants we see changing hands are either immediately converted to dry stores or an alternative solvent machine is installed. Liability for perc contamination could rebound to the previous owner.
TRAINING ON YOUR ‘NEW’ MACHINES
If you have bought a plant with some older machinery, chances are good one or more machines need to be babied. Whenever there is a new oper- ator on a machine, there will be issues. If you are buying, it might be worth arranging to work in the plant for free for a week before possession date to become more familiar with the equipment. Have a maintenance techni- cian go over the maintenance procedures with you. Some- times people do things with- out understanding why they do them, and so incorrect pro- cedures are passed from one owner to the next. Start fresh and break the misinformation cycle.
Equipment is vital to your success and integral to any change of ownership. Treat it as such. n
Kevin Marois is president of Integrity Mechanical Inc. in Calgary, AB. firstname.lastname@example.org
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