By Dan Skilleter | Part of our Special Series: the Ownership Solution
While it never cracks their Top-10 lists of policy asks, small-business groups and local chambers of commerce have for years been beating the drum of concern over the impending retirement of a massive cohort of baby-boomer business owners. The CFIB’s seminal 2023 report, Succession Tsunami, looms large in the discourse, with its eye-popping statistics of 76% of owners planning to exit over the next decade, with only 10% having a succession plan.
However (with the notable exception of Quebec), it’s a topic that governments across Canada have barely lifted a finger on. Which makes Ontario’s recent public foray into this policy space worth paying attention to.
Last week, Ontario unveiled their plan to implement Budget 2024’s commitment to invest $1.9 million over three years to establish a business succession planning hub. Its newly launched website, SuccessionOntario.ca, helps owners understand their options and funnels them towards a local Small Business Enterprise Centre (SBEC) for tailored advice and services.
They’ve decided to target so-called “micro businesses” and, from what I understand, a lot of the money is going into training and resources for SBEC staff across the province. The average business owner they’re targeting is of a generation that prefers in-person meetings to internet modules—so this approach makes sense.
A couple of interesting things.
First, it was a welcome surprise to see the succession hub’s focus on employee ownership. Featured prominently as the second ‘exit option’ for owners, it’s a strong sign that Canada’s relatively new Employee Ownership Trust (EOT) is breaking through. The EOT is a policy near and dear to my heart, and one I’ve been helping to support the policy design and advocacy of for years. Seeing Ontario recommend it to owners casually alongside options like intergenerational transfer is a sign that it’s becoming mainstream. [1]
Second, the government has adopted an all-too-familiar approach to its problem definition. They view the succession issue as too many business owners without the time, information or know-how to begin their exit planning before it’s too late. Success looks like owners engaging in succession planning early and finding a buyer willing to pay market rate. Any buyer will do.
While important, their framing is single-mindedly focused on the retiring business owner. It overlooks the outcomes for everyone else after the dust has settled. There’s a wide array of buyers out there, each with different implications for the future of the company, its workers and the local community where the company’s located. A foreign private equity firm is a very different new owner than a young entrepreneur, or the employees of the company itself.
The government’s policy lens should be expanded and include a broader commitment to the ongoing resilience, growth and sovereignty of the economy—its slogan is Protect Ontario, after all.
The amount of money Ontario has put into this so far is miniscule, but I take it as a positive signal that succession has finally reached the coveted podium of ‘policy file’ within the bureaucracy.
In 2026, expect Social Capital Partners to spend a lot more of its time working with governments like Ontario on building out the research and ideas to ensure Canada has the right sort of policy infrastructure to withstand the oncoming tsunami.
[1] For those of you who aren’t familiar, the EOT is new federal policy that is tailor-made to help business owners to sell their companies to their employees. For an overview, this is a good start.
Share with a friend
Related reading
Watch the video: EOTs in Canada – a new succession option for business owners with Jon Shell
In this episode of the Moolala: Money Made Simple podcast, Jon Shell joins Bruce Sellery to explain how employee ownership trusts (EOTs) work and why they could reshape business ownership in Canada. They discuss what employee ownership means and how it works, the purpose of the new Employee Ownership Research Initiative, current research gaps around employee-owned businesses and how employee ownership has evolved in Canada in recent years. The conversation explores how employee ownership could support business succession, strengthen workplaces and create new pathways for shared prosperity.
Watch the video: The risks and benefits of opening up private markets to everyday investors
The Ontario Securities Commission wants to give retail investors access to private markets. But as Rachel Wasserman tells BNN Bloomberg, when you look closely, it starts to look less like democratization and more like offloading risk onto people with the least power to absorb it. Private equity is already underperforming S&P index funds over 1, 5 and 10-year periods and PE's biggest historical champions are quietly reducing their exposure. This proposal to offer retail investors access to PE stands to benefit the asset managers and intermediaries, with everyday investors bearing the costs and risks. Financial inclusion does not mean broadening access to financial products that sophisticated players are already walking away from.
Watch the video: Why do Canadians work so hard and get so little?
Low productivity means lower wages and a lower standard of living. Canada does need to boost productivity—but we keep trying the wrong things. Watch SCP CEO Matthew Mendelsohn explain the productivity conversation Canada actually needs to have.