by Jessica O’Brien Cameron, Associate Portfolio Manager, Wealth Advisor, CIBC Wood Gundy –
If you haven’t started planning for your business succession, you’re not alone. Less than 10% of owners of small and medium businesses in Canada have a written, formal succession plan. Most business owners focus on growing their business, not thinking about selling it. However, as Baby
Boomers enter retirement age over the next decade, many Canadian family-owned businesses are expected to transition to new owners.
Having a formal, written succession plan ensures that you are in control of the future direction and legacy of your business. Not only can a succession plan potentially maximize the value of your business, but it may identify opportunities to minimize taxes.
The key components of a professional succession plan may include:
The identification of successors. This allows the current business owner to have a say in who will take over their business.
Succession timeline. This sets a clear timeline to establish when the transition will occur. This could be on a specific date or upon an unexpected event such as disability or death
Training and development. The new owners may require a transition period of training and development in order to ensure a seamless transition and future ongoing success.
Legal and financial considerations. This could include buy-sell agreements, business valuations and ensuring you qualify for the lifetime capital gains exemption.
There are several other benefits to having a succession plan.
Proper planning can strengthen stakeholder confidence as it demonstrates to employees and investors that the company has clear direction. It can also reduce potential family conflict, improve harmony during the transition, and provide you with peace of mind knowing that your wishes will be honoured, as the continuity of your business operations remain intact under new leadership. A plan may also identify and mitigate risks, such as loss of key personnel or upcoming financial obligations.
Preparing well in advance can help support a smooth transition. Reaching out to a Wealth Advisor with experience in business transition planning, would be a great place to start.
This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change.
CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.
Jessica O’Brien Cameron is a Wealth Advisor with CIBC Wood Gundy in Sidney. The views of Jessica O’Brien Cameron do not necessarily reflect those of CIBC World Markets Inc.
Individuals are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.
CIBC Wood Gundy is most appropriate for individuals with household investable assets of $250,000.
If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.
