Nearly half of Western Canadian mid-market business owners expect to retire within the next decade, according to new research from National Bank, signalling what the bank says could be a significant period of business ownership transitions across the region.
The survey found that 47 per cent of mid-market business owners in Western Canada plan to retire within 10 years, while 68 per cent expect to sell or transfer their businesses. Of those planning a sale or transfer, 60 per cent anticipate completing the process within the next decade.
The findings suggest many privately owned businesses in Alberta, British Columbia, Saskatchewan and Manitoba could change hands over the coming years as owners prepare to leave companies they have built over decades. The survey also indicates that business continuity is a higher priority than maximizing financial return for many owners considering succession.
"The results show us that Western Canada is entering a period of significant business transition," said Paul Gill, Senior Vice President & Co-Head, Commercial Banking and Private Banking, Western Canada, National Bank. "Many business owners are approaching retirement at the same time and will need to make decisions about the future ownership of their businesses – businesses that employ people, serve communities and drive the regional economy. The decisions these owners make over the next decade will likely have an impact well beyond their own retirement.”
Among owners planning to sell or transfer their businesses, 44 per cent identified ensuring the continuation of the business as their top priority, ahead of maximizing financial return from the sale, which was cited by 39 per cent. Another 36 per cent said finding the right person or people to take over the company was a priority.
The survey suggests succession planning is driven by considerations beyond the financial outcome of a sale, with owners placing importance on the future of their businesses and those connected to them.
National Bank said the research also points to a gap between awareness of succession planning and the steps owners have taken to prepare for a transition.
Among respondents planning to sell or transfer their businesses, 98 per cent said they know which advisors or professionals they would need during the process. However, 62 per cent said they had sought professional advice, while most had consulted only one advisor on average. More than one-third, or 36 per cent, said they had not yet engaged any specific advisors to assist with a sale or transfer.
Gill said beginning succession planning earlier can affect the range of options available to business owners.
"One of the biggest risks is not that business owners don't understand the importance of succession planning. It's that they may not realize how much opportunity early planning can create,” said Gill. "The earlier owners begin the planning process, the more options they may have to protect the value of their business, support employees and achieve their personal goals."
The survey also examined the personal reasons behind succession planning.
Among owners considering a sale or transfer, 37 per cent said spending more time with family was their leading personal priority. That was followed by the ability to fully retire at 36 per cent and pursuing a new business venture at 31 per cent.
National Bank said the findings indicate succession planning is increasingly shaped by a combination of business, financial and personal objectives as owners prepare for retirement and future career decisions.