Canadian economy at risk as retiring business owners transfer assets: CIBC

The next several years can see trillions of dollars in business assets changing hands, which could pose a serious risk to the Canadian economy, according ...

The next several years can see trillions of dollars in business assets changing hands, which could pose a serious risk to the Canadian economy, according to a CIBC World Markets report issued this week.

The report found that 310,000 business owners – which amounts to nearly 30% of all the small and medium-sized businesses in Canada, worth an estimated $1.9 trillion in business assets – will be selling or transferring control of their companies within the next five years. By 2022, those numbers are expected to reach 550,000 owners with $3.7 trillion in assets.

"The economic implications of the accelerated pace at which firms are changing hands should not be underestimated," said Benjamin Tal, CIBC deputy chief economist. "The firms that will change ownership in the coming five years currently employ close to two million people and account for no less than 15% of GDP."

Tan said faulty or badly executed succession plans could have a "ripple effect" through the Canadian economy, due to reduced productivity, job losses, premature sales and increased bankruptcy rates.

The report found that almost 60% of business owners that are within 10 years of retiring age have not addressed their succession plans with their families or business partners.

"The demographic realities of Canada in general, and the small and medium-sized enterprises in particular, suggest that succession planning is increasingly becoming a critical issue."

ecrawford@biv.com

@EmmaCrawfordBIV

comments powered by Disqus

Also Read

More From Economy

The talk this past week was about women on boards, how there isn’t enough of them and what should be done to get ...

Read Article

Consumer prices in British Columbia rose 1.1% year-over-year to October 

Read Article

British Columbia saw an increase in wholesale trade in September – the first gain in four months 

Read Article

Statistics Canada has released experimental estimates of gross domestic product for the period 2001 to 2009 for 33 census metropolitan areas (CMAs) 

Read Article

Expect to see more management buyouts for SMEs over the next decade, because they’re an attractive investment for the management team, investors and lenders

Read Article

Subscribe to our mailing lists

* indicates required

Newsletters

* You can modify your newsletter subscriptions at the bottom of any newsletter you receive.
×