Passing the Torch: Why Year-End Is the Perfect Time to Talk Business Succession
As another year winds down, most entrepreneurs are thinking about closing the books, enjoying family time, and maybe taking a long-overdue break. But if you’re a business owner starting to think about what comes next: whether that’s a sale, a transition to family, or simply slowing down, this season offers a unique opportunity.
A Changing Landscape for Canadian Business Owners
According to the Canadian Federation of Independent Business (CFIB), more than 75% of Canadian small business owners plan to exit their business within the next decade, representing more than $2 trillion in business assets set to change hands. Yet only 9% have a formal plan in place.
That gap means opportunity. Whether you plan to sell in two or ten years, every small step you take now adds clarity and value. Year-end can be the perfect moment to revisit where you stand and what’s next.
Choosing the Right Path Forward
There’s no one-size-fits-all exit. The right strategy depends on your goals, your timeline, and your sense of legacy.
Many owners decide to sell to a third-party buyer: perhaps a competitor, investor, or private equity firm. This route can deliver the highest payout but requires careful preparation: clean financials, strong management, and reduced dependency on the founder.
Others prefer to keep the business in the family. Legislative changes under Bill C-208 have made that option more tax-efficient, allowing parents or grandparents to transfer qualifying businesses to children or grandchildren and still access capital-gains treatment. However, the updated 2024 “genuine transfer” rules require real proof that control has passed to the next generation.
And for those without a clear family successor, a growing number are exploring Employee Ownership Trusts (EOTs): a new Canadian structure that allows employees to acquire a majority interest in the company, with a temporary tax exemption on the first $10 million of gains if the sale closes before December 31, 2026.
Each path has its own advantages. The key is aligning your decision with what matters most to you: liquidity, continuity, or legacy.
Preparing the People Side of the Plan
A good succession plan isn’t only about valuations and tax tables. It’s also about people.
If you’re passing the business to family, communication is everything. Openly sharing your intentions can prevent misunderstandings later. Talk about timing, roles, and your hopes for the future.
If you’re transitioning to employees or selling externally, start preparing your leadership team now. Introduce them to key relationships: clients, lenders, suppliers, and begin delegating decisions. The more independent your business looks from you, the stronger its market value will be.
Bringing It All Together
The end of the year is a perfect moment to take a quiet hour and ask yourself a few guiding questions:
What role do I want to play in the business over the next few years?
Do I know what my company is worth today, and how to increase that value?
Have I had early conversations with family or key employees about the future?
Does my personal financial plan reflect how and when I might step away?
Even if you don’t have every answer, simply starting those discussions brings momentum, and peace of mind into the new year.
A New Year, a New Chapter
For many owners, a business transition is less about stepping away and more about stepping forward: into mentoring, philanthropy, travel, or simply enjoying the freedom you’ve earned. The process takes time, but it starts with one clear decision: to plan.
So before you turn the page on this year, consider taking that first step. Reach out to your advisory team, review your structure, and sketch out your long-term vision. By this time next year, you could be looking at your business and your future with renewed confidence.
Because succession, at its best, isn’t the end of a story. It’s the continuation of one: built on everything you’ve achieved and everything still to come.
Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Eligibility for the LCGE, CEI, EOT, and intergenerational transfer relief depends on individual circumstances and current legislation. Please consult your advisor and qualified professionals before acting on any strategy.
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