Financial Cup of Team – Business Transition Planning 


by Sarah Chisholm
Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd.

As we celebrate small business week, it is a great time for business owners to start thinking about retirement. You have built a successful business – when do you want to take a step back, and how will you implement that transition? Every business transition is unique, so please grab your favourite cup of tea or coffee and let us consider.

Transitioning a business is typically a multi-layer process. A Financial Advisor can work as your quarterback to direct the transition and bring in key players such as your accountant, lawyer, and lender to get everyone on board. 

Transitioning a business can take a variety of forms. You may sell outright to a third party, negotiate a deal with a current employee, wind down the business, or keep the business going by transitioning to a family member. If you are in certain industries like farming, a family transition can often be implemented tax efficiently with a farm roll over. In all cases, your succession team will provide guidance on how to proceed in the most tax efficient manner and will provide solutions to smooth the transition.

Knowing who the business will transition to is often the easiest part. The hardest part may be the transition into retirement – the personal side and the financial side. On the personal side, business owners often connect their identity to the business itself. They see themselves as the business. What happens when you are no longer the business owner? Identifying retirement goals, activities, and networks is part of process to rebuild your personal and family identity. Look at the hours you currently devote to your business and consider how will you fill your time in retirement. 

As you focus on your goals for retirement, it will help your Financial Advisor build a strategy for your retirement cash flow. Having a good idea of the daily cashflow, vacation, large purchases that you expect to make over the first 5 years of retirement can bring clarity to the investment goals that need to be implemented for retirement. Are there enough savings in retirement savings plans and tax-free savings accounts or other assets to fund the retirement goals? What after tax amount do you need to net from the sale of your business to fund your retirement goals? Having a number in mind can help you weed out lowball offers from potential buyers.

For those business owners transitioning to family, another aspect comes into play – fairness. When businesses are transitioned from parents to children it is often done at some sort of discount, potentially with promissory notes forgivable on the parents passing. If there are multiple children in the family but only one is buying the business, it is important to look at the estate and legacy goals. Most business owners with multiple children understand that you can be fair to all your children, without necessarily being equal. Building assets outside of your business can help with this equalization dilemma. Real estate, investment accounts, and permanent life insurance can all be used as part of the estate equalization process for the non-business children.

The transition process can be challenging but remember the reason it is challenging is because you’ve built a successful business and significant wealth. Starting to plan early is important. Put your professional team on notice and get them started on a business transition plan for retirement. 

Sarah Chisholm is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.



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