2 minute read
Transferring Your Business: Planning for a Successful Retirement
MAT SMITH
Insurance Agent, Desjardins
905-896-1188 | 1-833-819-1188
Many Ontario business owners are approaching retirement, facing the critical and complex task of transferring their businesses. After years of hard work and personal investment, this step is as much about securing a legacy as it is about planning for the future. According to recent studies, nearly 6 in 10 Canadian business owners with employees plan to sell or exit their business within the next decade. Yet, many are unsure where to start, given the emotional and logistical challenges involved.
Business transitions involve far more than a simple sale. They require selecting a successor, knowledge transfer, due diligence, financial planning, and navigating the transition period. With timelines often stretching 5 to 10 years, early and thorough planning is critical to success.
Exploring Transfer Options
Partial Transfer
A gradual transfer option, this model allows owners to sell a portion of their business while remaining actively involved. This phased approach eases the pressure of finding an immediate successor and ensures continuity. For instance, a Desjardins client in the manufacturing sector opted to sell 49% of his business to key employees. This strategy enabled him to secure wealth, involve trusted team members, and step back from day-to-day operations gradually.
Monetization
This method involves partnering with an investor who brings both capital and expertise. Monetization allows entrepreneurs to unlock business equity while supporting growth and development. Investors may take on a passive or active role, depending on the agreement, making this option increasingly attractive in today’s competitive market.
Worker Cooperative
By transferring ownership and management to employees, worker cooperatives boost confidence among staff, clients, and financial partners. This approach is especially effective in businesses with strong employee commitment and a collaborative culture. Although less common, this model offers a meaningful way to preserve the company’s legacy through its workforce.
Getting Expert Guidance
Your business represents a cornerstone of your wealth and retirement plan. Every transition option requires careful planning, particularly regarding taxes and financing. Collaborating with specialists—such as advisors, lawyers, accountants, and tax experts—can provide the tailored support needed to navigate this process smoothly.
By starting early and leveraging professional expertise, Ontario entrepreneurs can secure their wealth, ensure a seamless transition, and leave a lasting legacy.
