The baby-boomer generation (those born between 1946 and 1964) represents a significant share of the Canadian population. While many within this category are opting to continue working well into what would traditionally be their retirement years, it appears that once they do retire, the resulting mass retirement will initiate an abundance of handovers of wealth and business ownership.
Transformation of the workforce as we know it is therefore on the not-too-distant horizon. An entire generation of baby boomers will depart the workforce, taking with them their talent, knowledge and industry familiarity, and 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. At times, finding a successor can 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.
Several small business owners depend on the sale of their business as a source of retirement income. Preparing for a smooth and efficient transition is therefore as important as the day-to-day operation of the business. This preparation eliminates the added pressure of leaving the future of the business to chance and increases the likelihood of receiving fair value for it upon its ultimate transfer.
There are various benefits to devising a formal succession 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.
Business owners considering developing and implementing a succession plan and/or a merger or acquisition, or those in need of general corporate and commercial counsel, should seek guidance from an experienced legal professional.
“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”