How to Ensure a Successful Business Transfer In Times of Crisis

Published on April 16, 2025

A business transfer is always a challenging process. The current crisis has exacerbated this, but there are several solutions to ensure success.

Both external (pandemic, labour shortage and economic crisis, for example) and internal (managerial and market turbulence) crises can seriously disrupt your planned business transfer process.

The significant impacts of a crisis on business transfer plans

How can you succeed despite the current economic uncertainty? You must adapt your succession plan to the unexpected. Which factors in particular?

Undermined financial wealth

In times of crisis, the transferor’s wealth may be weakened. The first step in your business transfer plan should involve securing family wealth and estimating the value of your organization. However, this estimate may fluctuate substantially, which could create uncertainty regarding the transferor’s financial projections.

Deterioration of economic performance

If the crisis adversely affects your company’s performance, this will impact both its valuation and cash flow, which are two fundamental elements of any business transfer.

Your timeline may also be called into question. An organization that planned for a gradual transfer over three to five years should perhaps anticipate a timeline of five to eight years to achieve its ultimate goal. Naturally, this extra time will impact the expectations of various stakeholders.

Vulnerability of human capital

One of the most concerning impacts is related to human resources. Key talent within your organization will be more receptive to offers from companies that are better positioned to face the crisis. This potential loss of strategic skills is a major risk factor for business continuity.

Destabilization of relations between stakeholders

In situations of crisis, relations between stakeholders and partners can be significantly disrupted. Confidence can be eroded and expectations must be recalibrated. This instability adds an additional layer of complexity to the business transfer process.

Strategic solutions to help you adapt

When faced with these challenges, several approaches allow you to secure the business transfer process.

Quickly evaluate and diagnose

Our first recommendation is that you quickly identify what could create financial anxiety for both transferors and transferees. This step allows you to conduct a realistic diagnosis of the situation and adapt your strategy accordingly.

A structured approach (“seven key considerations” methodology) involves:

Strike a balance between short-term needs and future vision

One of the mistakes that business leaders make during a crisis is focusing only on short-term survival. Ensure that your vision takes into account both the very short term and the very long term.

Striking this balance involves revisiting the transferor’s initial intentions and re-assessing the impact of the crisis on your company’s total assets and fair market value in light of the current circumstances.

Revisit your strategy and projections

During a crisis, you must review your strategic approach. It is therefore essential to explore new avenues such as diversification, strategic partnerships and new markets. This process must also be complemented by a rigorous reassessment of your financial forecasts.

During periods of uncertainty and upheaval, financial institutions raise their financial ratio requirements. The minimum acceptable threshold for debt service coverage ratios may be raised from 1.2 to 1.3 or higher.

You must adjust your forecasting models to meet these more stringent criteria and ensure that financing your business transfer is still viable. Adapting your projections can allow you to anticipate new expectations on the part of lenders and structure your financial arrangement accordingly.

Strengthen collective governance

You could consider collective governance in order to retain key talent and make your company more resilient. Collective acquisition, which opens up shareholding to a key employee or a group of minority shareholders, could be a solution.

This approach, which is part of a growing trend, takes several different forms: employee trust with minority interest, cooperative model, phantom stock plans with advantages similar to shareholding but without the status, or attractive bonus programs. The goal is to involve as many people as possible in the governance process within the board of directors or subcommittees, for example.

Create business alliances

Consolidation appears to be a widespread trend among entrepreneurs across Québec. Periods of crisis often push business leaders to take a more proactive approach to their search for strategic partnerships. Where a partner or competitor has no succession solution, creating a group can be a mutually beneficial option.

This trend is part of a broader movement across Québec. There are more businesses, but fewer entrepreneurs. Consolidation gives leaders opportunities to become more resilient in times of crisis and ensures the sustainability of business activities.

Anticipate and adopt a strategic communication approach

When faced with uncertainty, consider implementing your business transfer plan earlier than anticipated. This advance planning allows your company to absorb potential slowdowns and gives you more leeway.

A strategic communication plan involving all stakeholders (employees, clients, suppliers and financial partners) also provides significant leverage for maintaining trust and securing the required resources during the transition period.

Use a crisis as an opportunity for renewal

Although periods of crisis can be unsettling, they can also serve as opportunities to thoroughly review your business and governance models. What’s essential is vision planning and taking a methodical approach based on solid leadership and a competent team.