Picking a Deal Structure That Saved a Trucking Sale

The situation

Linh spent years keeping the books for other small businesses before she and Quang, who had spent over a decade driving long-haul routes across Ontario, decided to build something of their own. They started with two trucks and a handful of regional delivery contracts, running the operation out of a small yard in Georgina. Linh handled payroll, invoicing and the books; Quang ran dispatch and still drove the busiest routes himself when the schedule demanded it. Neither of them drew much of a salary in the early years — most of the profit went back into the company to buy another truck or cover a slow quarter — so on paper their personal income stayed modest even as the business itself grew into something worth a great deal more than either of them earned in a year.

By the time a private equity fund that specialized in rolling up mid-sized trucking and logistics businesses across Ontario took notice, Linh and Quang's company had become a credible platform in its own right: not large enough to buy a bigger competitor outright, but proven enough that the fund offered to back a larger move. The fund would provide most of the purchase capital for an acquisition, in exchange for a substantial equity stake in the combined business, with Linh and Quang staying on to run daily operations.

The target was a larger regional trucking company owned by Ji-ho, built around five long-term customer contracts and a clean safety record that made it an attractive fit. Ji-ho had run the company for fifteen years and was ready to step back, but had never sold a business before either and relied on his own accountant more than a dedicated deal advisor during the early negotiations. Once the term sheet was signed, at a price in the $8 to $15 million range, Linh and Quang retained Treadstone Law to take them through the purchase agreement and the corporate mechanics sitting underneath it, working alongside the fund's own financing counsel.

The structure that put the deal at risk

The private equity fund's preferred structure was straightforward: after closing, Ji-ho's 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, which is part of why the fund's own template documents defaulted to it.

The problem surfaced when our team reviewed Ji-ho'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. Whether an amalgamation trips a clause like that depends on how it is written: Canadian law treats amalgamating corporations as continuing rather than transferring anything, so a clause reaching only assignments would often not have been triggered at all. These three clauses named amalgamation and change of control outright, so the proposed structure counted as exactly that kind of triggering event, 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 Linh and Quang were paying for, undermining the valuation the fund had underwritten to finance the deal.

Two of the three customers were reasonable about it once approached. The third, Ji-ho'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, a fund expecting to close within a few months, and financing conditioned on the deal closing on schedule, silence from the largest customer put the entire transaction at risk. It also put Linh and Quang in an uncomfortable position: the acquisition was the biggest financial commitment either of them had ever made, backed by a fund whose own investment committee expected the deal to close on the timeline it had approved, not to stall indefinitely over a single customer relationship neither Linh nor Quang controlled.

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 of Ji-ho's material contracts during due diligence to identify exactly which clauses would be triggered by which corporate structure. We flagged the largest customer's contract as the highest-risk item on the closing checklist and briefed Linh and Quang, along with the fund's own deal team, on why the standard structure could not simply go ahead as planned.
2. Proposed a plan of arrangement as the alternative structure. Under the Ontario Business Corporations Act, a plan of arrangement is more than a court-supervised process: the court grants an interim order setting how shareholders are to be asked to approve the plan, then a final order only if satisfied the arrangement is fair and reasonable, and shareholder approval is required at every step. What an arrangement preserves or reorganizes depends on how its steps are written, so we built the plan to move Ji-ho's company into the group without an amalgamation step, keeping it a separate legal entity and keeping its contracts exactly where they were. It took longer and cost more because it required an application to the Superior Court, but for a company whose value depended heavily on a handful of customer relationships, avoiding the amalgamation trigger this way was worth the added 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 fund's financing counsel, explained the revised structure, provided assurances about service continuity under Ji-ho's existing operating team, and pressed for a decision rather than continued silence, since every week of delay put the fund's committed financing window at greater risk. We also shared references from other companies the fund had acquired and continued to run without disruption, addressing the customer's underlying worry that new ownership meant worse service.
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 on Linh and Quang's behalf, so the deal did not simply collapse. We tied the adjustment formula to objective terms in the eventual consent, such as a shortened renewal period, rather than a subjective assessment either side could dispute later.
5. Coordinated the court application and the closing timeline together. The plan of arrangement application, the outstanding consent, and the fund's financing conditions all had to land in roughly the same window. Our team kept the purchase agreement's conditions and the arrangement proceeding moving on a coordinated schedule, tracking both against the financing commitment's own expiry date so that neither process stalled waiting on the other and put the funding itself at risk.

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. Linh and Quang, advised by our team, invoked the price adjustment built into the purchase agreement, reducing the final price they paid Ji-ho by an amount in the mid six figures from what had originally been discussed in the term sheet, to reflect the reduced certainty in that customer relationship going forward.

Ji-ho did not get the number he had first hoped for, and the extra months of negotiation extended a process that was already stressful for a business owner selling for the first time. For Linh and Quang, the delay pushed their integration plans back and meant sitting with financing commitments open for longer than the fund would have liked. But the alternative — proceeding with the amalgamation as originally proposed and risking termination of the largest contract before or shortly after closing — could have cost far more, either by collapsing the deal entirely or by handing Linh and Quang grounds to walk away or demand a much larger reduction once the risk became obvious to everyone involved. 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 acquisition marked their company's first real step beyond running its own trucks, becoming operators of a combined business several times the size of what they had built themselves over the previous decade, with the fund's backing making that leap possible. For Ji-ho, the sale still converted years of building the company into a payout, just a smaller one than the term sheet had first suggested. And for the fund, the private equity-backed structure it had planned to use across 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. The fund's deal team, who had used the same amalgamation template on several prior acquisitions without incident, later told us they intended to build a contract review step into their standard process before choosing a structure on future deals, rather than defaulting to amalgamation and hoping nothing in the target's contracts objected.

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