Statistics Canada has noted that by 2020 close to 350,000 business owners will be aged over 55 and that within the next 8 years approximately 550,000 business owners will exit their business.
For business owners moving to retirement and transitioning their business, there are three major options for succession:
- Transition ownership within the family;
- Sell the business to an unrelated party; and,
- Cease operations and sell off any assets available.
- In order to successfully transition the business, owners should clearly outline their objectives, determine what the business is worth, identify likely successors, and understand the legal and tax implications of the transition.
To increase the possibility and value of a sale, there are several actions that the owner may take. For example, owners should understand that the business may be viewed as a bundle of assets, some of which may, and others that may not, be desired by a purchaser. As such, reorganizing the ownership of assets in advance may be warranted.
Action Item: If you are considering transitioning your business in the short or medium term, contact us. Early planning can help build value in the business, save significant dollars, and ease the transition challenges.