Transferring a business
In Quebec, transferring a business is undoubtedly one of the biggest intergenerational handovers of assets in our time. As the largest cohort of business owners retires from the SME sector and passes the torch to the next generation, major challenges will emerge over the next decade, and professional advice will be essential to ensuring the long-term survival of our entrepreneurial fabric. In this context, the demand for expertise is likely to accelerate and advisors interested in this industry must be prepared.
Today, we refer to 'repreneurship' to describe entrepreneurs who purchase the business activities of retiring entrepreneurs.
According to Statistics Canada, more than 15,000 businesses will change hands in Quebec this year alone. That’s about one in four (25%) business owners who intend to transfer. Furthermore, the pandemic is believed to have doubled the number of intentions to hand over ownership.
The process of transferring a business poses significant and underestimated generational challenges that can jeopardize its success, says Raymond Chabot Grant Thornton (RCGT). The gap is all the more important since over 80% of SMEs are family businesses. One variable that is often overlooked is the difficulty of creating links between sellers and buyers.In a study produced by Familles en affaires - HEC Montréal, the authors noted that “succession is the main challenge facing a family business.”
Two numbers from this survey are highly revealing:
— 43% of family firms have no succession plan.
— 30% rely only on an informal plan.
Many owner-managers underestimate the complexity of transferring a family business, which can lead to failures that leave SMEs vulnerable and also cause conflicts between the family members involved.
Over the past five years, 52,000 business transfers in Quebec were successful, but worryingly, this is only one third of all transfers, the rest having failed.
Our file on this topic will help you understand the importance of knowing your clients and their businesses, as well as the growing role played by women in the succession process. Also, since tax issues are unavoidable, the services of an ally who is a recognized tax expert will be key to the success of a business transfer. Finally, thanks to your expertise and your vision of the big picture, your involvement is more important than ever to help entrepreneurs achieve a successful transfer. The rest is up to you.
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