Small Business Succession Planning: Survey Results And Recommendations.pdf

Key Takeaways:

Widespread Intent to Exit: 72% of Canadian business owners plan to exit their businesses within the next decade, with 47% intending to do so in the next 5 years. This represents a potential transfer of over $1.5 trillion in business assets.
Retirement is Primary Driver: 81% of owners cite retirement as their primary reason for exiting.
Limited Formal Planning: Only 49% of owners have a succession plan, and just 8% have a formal, written one. More owners need to prioritize formal planning for a smooth transition.
Varied Exit Strategies: The most common exit method is selling to an unrelated buyer (48%), followed by selling to employees (25%) or family members (25%). Inheritance (21%) and winding down the business (15%) are also options.

Key Issues & Recommendations:

Access to Buyers: Business owners selling to outsiders need help identifying potential buyers.
Tax Barriers: Current tax rules can impede family transfers, particularly when a business is sold to a family member. Reform is needed to remove these impediments.
Formal Planning: More owners should develop formal succession plans to ensure a smooth transition and maximize the value of their businesses.

Benefits of Formal Succession Planning:

Ensures a clear vision for the future of the business.
Identifies potential successors and prepares them for ownership.
Maximizes the value of the business upon exit.
Minimizes tax liabilities and legal complexities.
Facilitates a smoother transition, preserving jobs and community impact.