The baby-boomer generation (those born between 1946 and 1964) are a significant share of the Canadian population and while many within this category are opting to continue working well after their retirement years, there has been an indication that once they do retire, the resulting mass retirement will initiate an abundance of wealth and business ownership handovers.
Transformation of the workforce as we know it, is therefore on the not-too-distant horizon. An entire generation of baby boomers will have departed, taking with them their talent, knowledge and industry familiarity, potentially creating a talent gap.
Are we in a baby-boomer succession crisis?
A vast number of baby-boomer business owners do not have a succession strategy in place. Finding a successor can sometimes be challenging. As a result, what could be deemed as an undesired consequence becomes unavoidable, and the business may have to be dissolved. Should this occur with any degree of frequency, it could have a significant negative impact on the Canadian economy as a whole.
Planning ahead
Several small business owners depend on the sale of their business as a source of income for retirement. Preparing for a smooth and efficient transition is therefore as important as the day- to-day operation of the business. This preparation will eliminate the added pressure of leaving the future of the business to chance and increases the likelihood of receiving a fair value upon its ultimate transfer.
There are various benefits to devising a formal succession plan, as opposed to an informal plan. Formal written succession plans are typically prepared with the help of relevant professional advisors. The input of legal professionals can address a number of issues, including earn-outs, restrictive covenants, and developing a dispute resolution mechanism.
For business owners considering forming a succession plan and/or possibly contemplating a business transfer, merger or additional general corporate and commercial counsel, seeking guidance from an experienced legal professional is always recommended.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.