Quebec faces a critical situation in 2024, often referred to as a “ticking time bomb” for its small and medium-sized enterprises (SMEs). With a 60% increase in the number of business transfers compared to last year, approximately 24,000 businesses are expected to change hands this year, compared to 15,000 in 2023 , and more than 34,000 businesses are expected to change hands over the next ten years.

According to the recent article in the Journal de Montréal , this figure, revealed by the president and CEO of the Centre de transfert d'entreprise du Québec (CTEQ), highlights a dramatic acceleration in transactions: "We expect 24,000 businesses to be transferred this year, while we were talking about 15,000 last year. This is an exponential increase of 60%."

This dynamic places enormous pressure on Quebec's economic fabric. Many business owners are hesitant to sell, fearing disruption to relationships with their employees, customers, or suppliers. Yet, this wave of massive retirements, particularly among baby boomers, exposes SMEs to increased risks of closure or acquisition by foreign investors. Without succession planning, many businesses could disappear or fall under foreign control.

The need for local buyers and succession plans is therefore more urgent than ever to ensure the continuity of SMEs and preserve the local economy. This wave of massive transfers, which shows no signs of slowing, requires a strategic response to preserve Quebec's economic footprint in the years to come.

Continued growth in business transfers

Since 2021, the number of business transfers has exceeded the number of new business creations. According to a study by the Observatoire du repospreneurat et du transfert d'entreprise du Québec (ORTEQ) , approximately 7,400 business transfers are carried out each year, with a total of 52,000 transactions observed between 2015 and 2021. In 2021, a peak of 8,600 transfers was reached, marking a 31% increase compared to 2015.  .

Sectors most affected by this trend include transportation, warehousing, construction and manufacturing.  This economic dynamic represents assets of 26 billion dollars each year and concerns approximately 120,000 employees.  These companies that change ownership also show superior performance, with average revenues of $4.8 million, 9.2 times more than newly created companies. .

Here are the key statistics from the 2024 Quebec Entrepreneurial Index :

1. 42.6% of business owners have identified a successor, a figure that rises to 51.4% for family businesses.

2. 57.4% of owners do not have a formal succession plan.

3. 34.1% of owners aged 55 and over plan to transfer their business within the next five years.

4. Only 30.8% of owners consulted external experts for the business transfer process.

An alarming lack of preparation

Despite this growth, an alarming proportion of business owners are not ready for this transfer . According to the Quebec Entrepreneurial Index, only 42.6% of owners have identified a successor, and 57.4% do not have a formal plan in place. This exposes many businesses to uncertainty about their future, with increased risks of sales to foreign buyers. This phenomenon has already been observed in other regions of the world, such as Japan, where 20% of businesses have disappeared due to poor planning.  .

Image Source: Quebec entrepreneurial index

Initiatives to support entrepreneurship

To address this situation, several initiatives have emerged. The Quebec Business Transfer Centre (CTEQ) is on the front lines, supporting owners and buyers through this process.

Another key player is the École d'entrepreneurship de Beauce (EEB) , which has launched a training program called Mouvement Propulsion Repreneurship . This program, supported by partners such as the Fonds de solidarité FTQ, aims to train 1,000 buyers and sellers over the next five years. The EntReprendre program is aimed at future buyers, while the Pérenniser program supports owners in preparing to sell their business. These initiatives are essential to ensuring the continuity of Quebec businesses while keeping them under local control.

The RJCCQ's (Regroupement des jeunes chambres de commerce du Québec) Repreneurship Movement aims to address the shortage of buyers in Quebec, an issue that could lead to the closure of 5.6% of businesses by the end of the year. This structuring project aims to support economic recovery and development through business transfers. It is organized around three axes: raising awareness among entrepreneurs about taking over, equipping them with training, and facilitating meetings between sellers and buyers to encourage collaboration.

TRNSFR 's approach stands out for its comprehensive support and structured resources to promote business transfers in Quebec. TRNSFR plays a key role in facilitating business transfers by offering a well-supported process designed to assist transferors and transferees at every stage of the process.

Through its network of expert partners, TRNSFR provides essential tools, ranging from marketing performance analysis to tax and legal reviews. This process ensures that buyers have access to best practices, accurate data, and comprehensive verification prior to the transaction. In addition to this technical support, TRNSFR also facilitates meetings between sellers and buyers, increasing the chances of successful networking and transactions.

With this approach, TRNSFR helps strengthen the continuity of Quebec businesses by reducing obstacles to takeovers and promoting a smooth and secure transfer of businesses, thus guaranteeing the sustainability of the local economic fabric.

The Challenges of Financing

Another major challenge in the transfer process is access to financing. Companies are often valued based on multiples of their earnings, which can make the purchase difficult for buyers. The National Bank and Investissement Québec, for example, have proposed innovative solutions for structuring financing involving multiple stakeholders or gradually opening up shareholding. This approach allows key employees to become shareholders, thus preventing the company from being acquired by foreign groups.

Furthermore, financing flexibility is essential to enable the company to adapt to a competitive environment without being overwhelmed by financial constraints. This includes creating room for maneuver to cope with unforeseen events while ensuring the company's long-term sustainability.

A promising future, but challenges to overcome

Quebec is at a pivotal moment for business acquisitions. The scale of the wave of business transfers offers considerable opportunities for buyers, while also posing challenges for sellers. Urgent action is needed to ensure business owners are adequately prepared, not only to maximize the value of their businesses, but also to ensure they remain in Quebec hands.

In conclusion, business takeovers and transfers are crucial issues for Quebec's economic future. Current initiatives, whether they involve support from organizations backed by the provincial government, banks, or entrepreneurship training programs, are important steps toward overcoming these challenges. With adequate preparation and strategic support, Quebec can ensure that these businesses continue to contribute to the province's collective prosperity in the years to come.