Peter’s Blog

Often the use of a Corporate Lawyer comes about as a result of challenges in business situations. Peter’s blog has been created to demonstrate the range of business situations that require the introduction of a corporate lawyer early in the process to prevent the often complex problems businesses find themselves in. Short succinct examples on asset protection, estate planning, succession planning and a variety of other matters will be addressed interspersed with some fun tongue and cheek responses to the media on issues of corporate law. Enjoy!

Canadian Family Business Accelerate Succession Plans

Navigating Change: Canadian Family Businesses Accelerate Succession Plans Amidst Economic Shifts

A recent study by KPMG LLP in Canada reveals a significant trend among Canadian family business owners, with 79% fast-tracking succession plans due to evolving economic landscapes and internal family dynamics. The survey of 285 leaders from 700 small- and medium-sized family businesses indicates that 73% expect to transition to new leadership within the next three to five years.

Key Points of the Article:

Multifaceted Drivers: The acceleration of succession plans (79%) is attributed to various factors, including the ever-changing business and economic landscape, disruptive technologies, climate considerations, tax reforms, and complex family dynamics.

Strategic Planning: While 71% of leaders have a formal plan in place for business continuity, 19% have a less detailed plan, and 6% acknowledge an understood, but undocumented, succession arrangement within the family.

Tax Legislation Impact: A notable 70% of owners are aligning their succession timelines with new tax legislation from the 2023 federal budget, aiming to implement plans before the year-end to navigate more stringent regulations affecting intergenerational transfers.

Generational Shift Dilemma: Despite 79% aspiring to pass the business to the next generation, 71% express concerns about their readiness. A significant number (69%) contemplate selling to an external entity within three to five years.

Adaptive Strategies: Recognizing the challenges, Yannick Archambault of KPMG suggests that hiring a non-family member as CEO while retaining family ownership could be a viable strategy for those facing succession hurdles.

Closing Windows: Owners contemplating intergenerational transfers are urged to act swiftly, with Chris Gandhu highlighting the narrowing window to navigate new tax rules effectively.

Challenges and Solutions: The study emphasizes that inadequate succession and transition strategies, coupled with financial factors, pose substantial risks to family businesses. Getting the succession plan right is deemed critical for sustained success.

As the Canadian family business landscape undergoes significant shifts, proactive planning and strategic decision-making emerge as vital elements for successfully navigating this period of change.

So, whether you’re part of a family empire or love a good biz drama, this is a trend to watch!

Read the full article here

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