Picking a Deal Structure That Saved a Trucking Sale

The situation

Linh kept the books for the trucking company she and Quang had built together over almost twenty years. He drove the long-haul routes in the early days and later ran dispatch as the fleet grew; she handled payroll, invoicing and the relationship with their accountant. Neither of them drew much of a salary — most years they left the profit in the company to buy another truck or cover a slow quarter — so on paper their personal income stayed modest even as the business itself became worth a great deal more than either of them earned in a year.

The company was still incorporated the same way it had been since its early years, run out of Georgina with a small back office and a yard where the trucks were kept overnight. Linh and Quang had never brought in outside investors and had never seriously considered selling, until a private equity fund that had been rolling up trucking and logistics companies across Ontario approached them directly. The fund's representative, Ji-ho, made the case that the company's five long-term customer contracts and clean safety record made it an attractive addition to a larger group the fund was assembling.

By the time the offer reached a range of roughly $10 million, the company had a fleet of trucks held through the corporation and two owners who had never sold a business before. Linh and Quang came to Treadstone Law once the term sheet with the fund was signed, wanting a lawyer to take them through the actual sale agreement and the corporate mechanics sitting underneath it.

The structure that put the deal at risk

The buyer's legal team proposed a straightforward-sounding structure: after closing, the target company would be amalgamated with the buyer's acquisition subsidiary, combining the two into a single corporation under the Ontario Business Corporations Act. It is a common way to fold a newly purchased company into a buyer's existing group, and it is usually cheaper and faster than the alternative.

The problem surfaced when our team reviewed the company's major customer contracts as part of the closing checklist. Three of the five largest agreements contained clauses requiring the customer's written consent before any assignment, amalgamation or change of control involving the trucking company. An amalgamation counts as exactly that kind of triggering event under how those clauses were drafted, regardless of how routine the transaction otherwise was. Without consent, each customer would have grounds to terminate on short notice — and losing even one of those contracts would materially reduce what the company was worth to the buyer, or to anyone else.

Two of the three customers were reasonable about it once approached. The third, the company's single largest account, was not in a hurry to sign anything and initially declined to respond to consent requests at all. With a signed term sheet and a buyer expecting to close within a few months, silence from the largest customer put the entire transaction at risk.

What we did

1. Mapped every consent trigger before the purchase agreement was finalized. Rather than wait for the amalgamation to happen and deal with objections afterward, our team went through each material contract during due diligence to identify exactly which clauses would be triggered by which corporate structure, and flagged the largest customer's contract as the highest-risk item on the closing checklist.
2. Proposed a plan of arrangement as the alternative structure. Under the Ontario Business Corporations Act, a plan of arrangement is a court-supervised process that can achieve a similar commercial result to an amalgamation — combining or reorganizing corporate entities — while preserving the target company's separate legal existence and its contracts more cleanly. It takes longer and costs more because it requires an application to the Superior Court, but for a company whose value depended heavily on a handful of customer relationships, avoiding an assignment trigger altogether was worth the added time and expense.
3. Negotiated directly with the holdout customer's own counsel. Even with the structure changed, the largest customer still had leverage and knew it. Our team, working alongside the buyer's counsel, explained the revised structure, provided assurances about service continuity under the same operating team, and pressed for a decision rather than continued silence.
4. Built a fallback into the purchase agreement itself. Because consent from the largest customer was not guaranteed even with the better structure, we negotiated a closing condition and a purchase price adjustment tied to that specific contract, so the deal did not simply collapse if the customer refused or delayed past the closing date.
5. Coordinated the court application and the closing timeline together. The plan of arrangement application, the outstanding consent, and the buyer's financing conditions all had to land in roughly the same window. Our team kept the sale agreement's conditions and the arrangement proceeding moving on a coordinated schedule so that neither process stalled waiting on the other.

The outcome

The largest customer eventually consented, but only after roughly two additional months of negotiation and only on terms that included a shorter contract renewal cycle than before, giving the customer more flexibility to walk away in future. The buyer took that reduced certainty into account and invoked the price adjustment built into the purchase agreement, reducing the final purchase price by an amount in the mid six figures from what had originally been discussed in the term sheet.

Linh and Quang did not get the number they had first hoped for, and the extra months of negotiation extended a process that was already stressful for two people who had never sold a company before. But the alternative — proceeding with the amalgamation as originally proposed and risking termination of the company's largest contract before or shortly after closing — could have cost far more, either by collapsing the deal entirely or by handing the buyer grounds to walk away or demand a much larger reduction once the risk became obvious. The transaction closed with all five customer contracts intact, the plan of arrangement approved by the court, and both sides accepting a result that was worse than their opening positions but better than the alternative each was actually facing.

For Linh and Quang, the sale converted two decades of reinvested profit into a payout that finally reflected years of modest personal draws. For the buyer, the private equity-backed structure it had planned to use elsewhere in its portfolio had to be adapted for this one company — a reminder that the cheapest standard structure is not always the right one once you look at what it actually touches.

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