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Entrepreneurial Succession Study
A concern with a human scale
QUÉBEC CITY, April 29, 2019 – The Chambre de commerce et d’industrie de Québec (CCIQ), Raymond Chabot Grant Thornton and Desjardins shared the revealing results of an economic study documenting the impacts of the delay in entrepreneurial succession in the Greater Québec City area. An overview of the issue was developed using data from an e-survey conducted by Léger with CCIQ and Desjardins members, and Raymond Chabot Grant Thornton clients as well as some of their partners, from January 25 to February 25, 2019. The response rate was 11% of a sampling of 1,827 entrepreneurs.
Julie Bédard, CCIQ President and CEO, said: “While there have been successful entrepreneurial transfers in the Greater Québec City area, we must acknowledge that there is a delay in the implementation of entrepreneurial succession plans. The study reveals that investments, hindered by this delay, represent $97M, while the total economic impact is close to $200M. We want to better support entrepreneurs in this process; this is why this study presents interesting solution possibilities. The CCIQ intends to provide strong leadership by gathering all those involved around the same table to ensure the sustainability of businesses in the region.”
Vice-President and National Entrepreneurial Succession Leader at Raymond Chabot Grant Thornton Éric Dufour added: “To ensure the sustainability of our businesses, there must be investments, even when a transfer is on the horizon. More than half of business leaders (54%) confirm that investments are affected in a succession situation, which undermines the development of our businesses. Entrepreneurs need to be able to continue investing. To do this, they need to know about all of the programs available to them to carry out a successful succession plan, in addition to benefitting from tax fairness at the time of the transaction, which isn’t always the case, federally speaking, when selling to a family member, for example. The human aspect is also very important in succession planning, even more so than financial and tax planning according to 76% of the leaders surveyed. This is also why, for several years now, our team has been using an integrated succession approach that takes into account all human, psychological, legal, financial and tax aspects.”
Richard Quinn, Senior Manager, Business Transfers, at Desjardins, said: “The results of this study are worrisome considering that 93% of respondents between the age of 45 and 55 do not know about any of the available financial programs. However, financing is a crucial step for a successful transfer process. Not only does it enable transferors to secure their financial needs in relation to their retirement plan, but it also enables the succession to fulfil its dream of acquiring a business and making it grow. Desjardins plans to attack this problem head on.”
Overview of issue and analysis of impacts
Among respondents, 76% are worried about other aspects in addition to the financial and fiscal ones:
- When asked about the reasons inciting them to consider entrepreneurial succession, 74% of respondents aged 55 years and up and 50% of those aged 35 to 55 expressed a desire to slow down. Therefore, more leaders want a better quality of life;
- The labour shortage and management challenges affecting the younger generations are also major issues slowing the pace.
The study also showed there is a significant slowdown in investments in our region:
- 54% of respondents confirm avoiding the investments needed for transactions or the growth of the business in the absence of complete answers related to the succession plan.
Relevant solution options
Given the economic impact resulting from the delay in implementing entrepreneurial succession plans, here are pertinent recommendations to consider:
- Restructure the ecosystem for guiding entrepreneurs by creating an action table with the various stakeholders involved in this issue;
- Improve the communication of information to enable entrepreneurs to learn about existing financial support programs;
- Promote a progressive approach by maximizing good intergenerational coexistence;
- Continue the fight for tax fairness with respect to transactions between family members;
- Set up a training program and plan to prepare entrepreneurial buyer-managers.
The report is available by clicking here.
About the Chambre de commerce et d’industrie de Québec
The Chambre de commerce et d’industrie de Québec (CCIQ), which has more than 4,700 members, raises awareness, mobilizes and acts to promote the economic development of its members and community. The largest group of business people in eastern Quebec, it is the privileged voice of the business community in Québec City and the main voice for the regional economic community.
About Raymond Chabot Grant Thornton
Raymond Chabot Grant Thornton is a professional services firm dedicated to the success of organizations and their leaders since 1948. The firm‘s advisors are committed to helping clients thrive by obtaining a deep understanding of what is important to them, their business and their industry. This knowledge, combined with a team of motivated and talented professionals help accelerate growth. A Quebec and Canadian leader in the areas of assurance, tax, advisory services and business recovery and reorganization, Raymond Chabot Grant Thornton boasts more than 2,600 professionals, including approximately 200 partners, working in over 100 offices across the province of Quebec and in the Ottawa and Edmundston regions.
Together with Grant Thornton LLP, another Canadian firm, and the Grant Thornton global organization, our global footprint spans across more than 135 countries with over 53,000 people who provide real insight, a fresh perspective and agility to keep clients moving ahead.
About Desjardins Group
Desjardins Group is the leading cooperative financial group in Canada and the fifth largest in the world, with assets of $295.5 billion. It has been rated one of Canada’s top 100 employers by Mediacorp Canada. To meet the diverse needs of its members and clients, both individuals and businesses, its full range of products and services is offered through its extensive network of points of service, virtual platforms and subsidiaries across Canada. As one of the strongest banking institutions in the world according to The Banker magazine, Desjardins has capital ratios and credit ratings that are among the best in the industry.
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Source:
Étienne Cummings
Manager, Communications and Public Relations
Chambre de commerce et d’industrie de Québec
418-906-1748
[email protected]
Francis Letendre
Chef, Affaires publiques
Raymond Chabot Grant Thornton
514 390-4201
[email protected]