Baby boomer retirements will result in a huge transfer of business ownership over the next five to 10 years. (Photo by THE CANADIAN PRESS)

‘Baby Boomer’ retirements will cause a huge wave of business transfers: CFIB

TORONTO — Approaching “baby boomer” retirements will result in a huge transfer of business ownership over the next five to 10 years, but only a small percentage of owners have a formal written succession plan, the Canadian Federation of Independent Business says.

In a report released Wednesday, the CFIB suggests 47 per cent of business owners with a small or mid-size enterprise (SME) intend to exit their business within the next five years and 72 per cent plan to exit within a decade.

However, the CFIB report said only eight per cent of owners surveyed had a formal, written succession plan. About 51 per cent didn’t have any plan and 41 per cent had an informal plan.

“While it is encouraging that a good proportion of business owners intend to pass their business on to a new generation, the lack of formal planning gives rise to significant risks for Canada’s competitiveness and prosperity,” the CFIB says in a report by research analyst Marvin Cruz.

“With potentially over $1.5 trillion in assets changing hands during the next 10 years, Canada cannot afford to have so many SME owners unprepared to make that transition.”

The CFIB’s conclusions are based on an online survey of 2,507 small business owners conducted last May and a projection based on a Statistics Canada data on incorporated SME assets in 2016.

In four out of five cases, retirement was cited as the reason for the planned departure from a business. Other reasons included a move to another business venture or lack of profit in their current enterprise.

About 62 per cent of survey respondents said they’d rely on the sale of their business as a source of retirement income.

The CFIB said formal succession plans have the advantage of being developed with the input of professional advisers who can help develop a timetable and a process for resolving disputes.

It also identifies a number of barriers to creating a succession plan — such as family members who don’t want to take over the business and entrepreneurs who would prefer to start a new business than buying an existing business.

“Currently, there are very few options in Canada to connect those looking to exit their business with those who may be interested in purchasing a business and may be an area for governments to explore,” the report says.

It also suggests that the government change the tax rules so that transfers of small businesses to family members are treated in a similar manner as to a non-family buyer.

Under current rules, a gain in the business’s value over the owner’s tenure is treated as a dividend if sold to a family member and as a capital gain if sold to a non-family buyer.

“In effect, these rules can discourage the transfer of a business to a family member because the transaction does not include the right to a lifetime capital gains exemption and is, therefore, more heavily taxed.”

Just Posted

Maskwacis RCMP arrest, charge wanted man

A Maskwacis man is facing weapons-related charges after allegedly resisting arrest. Two… Continue reading

The shelter is full: Many abused women and children in central Alberta will face a tough holiday

Alberta has one of highest domestic violence rates in the country, says a report

‘Heart of darkness:’ Closing arguments in Calgary quadruple killing trial

CALGARY — Lawyers for a pair accused in a quadruple killing say… Continue reading

Chinese ambassador warns Canada against adopting motion calling for sanctions

MONTREAL — China’s new ambassador to Canada is threatening “very firm countermeasures”… Continue reading

Liberal MP Anthony Rota upsets Regan to become Speaker in minority Parliament

OTTAWA — Liberal MP Anthony Rota has been elected Speaker of the… Continue reading

Your community calendar

Tuesday The Central Alberta Council on Aging will hold its Christmas General… Continue reading

‘Heart of darkness:’ Closing arguments in Calgary quadruple killing trial

CALGARY — Lawyers for a pair accused in a quadruple killing say… Continue reading

Milan Lucic scores first as a Flame, Calgary beats Buffalo

Flames 5 Sabres 3 CALGARY — Milan Lucic scored his first goal… Continue reading

Chinese ambassador warns Canada against adopting motion calling for sanctions

MONTREAL — China’s new ambassador to Canada is threatening “very firm countermeasures”… Continue reading

Liberal MP Anthony Rota upsets Regan to become Speaker in minority Parliament

OTTAWA — Liberal MP Anthony Rota has been elected Speaker of the… Continue reading

Supreme Court won’t hear appeal from former Nazi death squad member

Jewish groups across the country hailed the Supreme Court’s decision not to… Continue reading

Consensus comes 30 years later that Montreal massacre was an anti-feminist act

MONTREAL — Thirty years after the worst mass shooting in Canadian history,… Continue reading

Angry Alberta legislature sitting ends with cross-party fight over room booking

EDMONTON — The fall sitting of the Alberta legislature has wrapped up,… Continue reading

Most Read