What is collective succession?

A sale or transfer of a traditional business (i.e., sole proprietorship or private company) to a social enterprise (cooperative or NPO).

A study conducted in 2017 by the Business Development Bank of Canada shows that 60% of Canadian business owners are over 50 years old and that 40% of them expect to retire by 2023. Of that number, 40% of entrepreneurs who plan to sell their business to a third party in the next five years seem to have done little planning far to get their financial reports in order. Also, most have not taken any steps to optimize their cash flow in anticipation of a sale transition. This inaction does not bode well for the future value of their business.

In Atlantic Canada, 51% of owners plan to leave their business, and out of those, 83% aim to retire. The three options considered for closing the business are family succession (26%), sale of the company (52%) and liquidation of the business and sale of its assets (22%). It should be noted, however, that only 3% of companies with 20 or more employees intend to liquidate their business, compared to 24% of those who run smaller companies. Selling their business outside the family is the preferred option for larger SMEs.

Previous studies show that the best succession plan doesn’t take months, but years to pay off. However, most business owners believe the process will take a lot less time than experts predict. Of the companies surveyed, 46% estimate that the succession process will take less than a year, 37% a year or two, 13% three to five years and 4% more than 5 years.

Transferor (seller)

Do you want to transform or sell your business in collective form (cooperative or NPO)?

Download the transferor’s guide.

Buyer

Do you want to take over a company in collective form (cooperative or NPO)?

Download the buyer’s guide

Useful links and resources