Over 75% of small and medium-sized business owners in Canada are looking to sell their business over the next decade according to new research from the Canadian Federation of Independent Business (CFIB). This equates to transfers of over $2 trillion worth of corporate assets in the coming years.
Business owners stated retirement (75%), burnout (22%), and a desire to take a break from business ownership (21%) as drivers for the desired exit. Despite this predicted withdrawal, only about 9% of business owners have a formal succession plan prepared. This lack of succession planning poses huge risks for businesses that are fundamental to the Canadian economy.
Some of the biggest challenges business owners face with succession planning include:
- finding a suitable buyer or successor
- measuring the financial worth of their company
- preparing the company for operational independence which includes minimizing its reliance on owners for daily management
In addition, small and medium-sized business owners seeking to exit place great importance on protecting current employees, obtaining the best possible selling price, and selecting a buyer that shares the same principles and practices as the company.
Almost half of business owners turn to accountants for help with a succession plan (43%). A significant proportion of business owners choose to handle the process themselves (39%), while a minority seek the advice of lawyers (24%). These figures suggest that many business owners do see the value in seeking professional help with a succession plan. Ultimately the decision to seek professional help in succession planning is a personal one dependent on varying factors.
For those seeking professional assistance, engaging an M&A firm is a great way to set your business up for success post-exit. At Portage, we help measure the financial worth of your business. We also offer a Value Enhancement Program which evaluates your business for factors that lower its value, and we work with you to improve them. We have an extensive Buyers Database and can match our clients with compatible buyers as well as aid the negotiation process.
We understand the many concerns of business owners who are considering leaving the business. Our goal is to make the exit process as seamless as possible for our clients- helping them achieve their desired outcomes and ensure a smooth and successful transition.
Jim Friesen, MBA, CPA, CMAA
Portage M&A Advisory | Partner