Business acquisition: Have you given Quebec a thought?

Published 2019-07-01 12:23

According to a recent survey by the Université du Québec à Trois-Rivières (UQTR), owners of Small and Medium-sized enterprises (SMEs) in Québec are more likely to sell their enterprises than in any other Canadian regions. Indeed, almost one in four small business owners have stated that they plan to transfer their business between the years 2017 and 2022. In other areas of Canada, only one in five business owners state they might want to sell their enterprises.

In Québec, the aging of the population is leading to an increase in the number of vacant positions each year, and some sectors of employment are experiencing a problematic lack of workers. We talk a lot less about, however, how SMEs are also affected by this phenomenon. By 2030, almost a quarter of the population will be over 65 years old, which is why more and more entrepreneurs are trying to sell their businesses.

In both Quebec and Canada, just over half of the majority owners of SMEs prefer the external transfer of their SME rather than a family transfer or selling to an employee. Expats rejoice! All the more so as the formalities are rather simple, even for the foreign buyers: at the beginning, one can be helped by the Center for the transfer of company of Quebec which has branches all over the Province.

Favorable sectors

According to the UQTR survey, SMEs to be transmitted are found in all economic sectors, but mainly in tourism and accommodation and food services; which is not a surprise! In fact, these two sectors are pillars of Quebec's economy. Tourism, for example, accounts for about $ 14 billion in annual revenue.

According to data from Job Bank - the Government of Canada's official job search site - restaurant services account for more than 70% of the industry's GDP and more than 85% of the workforce in Quebec. Nevertheless, it should be noted that the accommodation and food services sector is the largest contributor to bankruptcies, accounting for 19% of all business bankruptcies in Quebec, according to 2014 data.

The SMEs to be transferred usually have 5 to 19 employees and have very diversified growth profiles. "Field observations show that the transferred SMEs often adopt longer-term sustainability strategies that do not necessarily promote high growth when the buyer conducts a strategic regeneration," warns Professor Louise Cadieux, one of the two authors of the report. investigation of UQTR.

Gaining in popularity

The business recovery practice is gaining momentum in North America. For the 2007 and 2017 period, the proportion of Québec SMEs that were taken over from the buyer rose from 25% to 32%, compared to 23% and 25% for Canada as a whole. As a result, in 2017, almost one in three Quebec SMEs was a business takeover, while in Canada it stood at one in four SMEs.

It is also good to know that buyers are more numerous in rural areas: in 2017, 44% of SMEs in rural areas belonged to buyers in Quebec. In Canada, buyers in rural areas accounted for 31% of buyers.

In May 2019, UQTR unveiled the first results of its quantitative survey on the takeover of businesses in Quebec and Canada. To come to this conclusion, Professors Louise Cadieux and Marc Duhamel analyzed data from Statistics Canada's 2017 Survey of Financing and Growth of SMEs. A second report is expected in the fall of 2019.