Dark clouds hover over Quebec inc. : there could be 34,000 businesses to take over by 2025 and owners’ intentions to leave have doubled for the next year.
“We are talking about 2,200 companies that are about to close for lack of a buyer. It is a threat to the Quebec economy,” notes with concern Pierre Graff, CEO of the Regroupement des jeunes chambres de commerce du Québec (RJCCQ).
These fears are shared by Alexandre Ollive, big boss of the Center de transfert d’entreprise du Québec (CTEQ). He considers it essential to ensure the survival of well-established SMEs, particularly in the regions.
It must be said that the cocktail is explosive. In 2020, the University of Quebec at Trois-Rivières identified 34,000 companies for sale within five years. And the phenomenon seems to be accelerating. The number of entrepreneurs who want to sell in the next year doubled in the second quarter of 2022, according to Statistics Canada.
Opposite, there is a scarcity of labor and young people who want to undertake, but who do not start much, comments Mr. Graff. The two traditional avenues for business transfer – family succession and external resale – will not be enough to meet the needs. And many entrepreneurs do not yet have succession plans or are considering closing.
SELL TO EMPLOYEES
A third avenue exists for the takeover: selling to employees. But it is little considered, less than one in five succession plans according to a study by the Canadian Federation of Independent Business (CFIB).
However, it could save many companies, according to experts consulted by Le Journal.
First, selling to employees helps ensure continuity, explains Mr. Ollive. The transfer is smooth to people who know the company, and that the customers also know. The formula also guarantees the maintenance of expertise and jobs at the local level.
UNITY IS STRENGTH
The other undeniable advantage is the number. Going into it collectively will make people safer to go into business, points out Mr. Graff.
This is also the opinion of Pascal Brulotte, general manager of the Edgar Cooperative.
“It’s easy to buy or buy a business without losing your shirt,” he says. La Coop Edgar, me, Pascal Brulotte alone, I would not have been able to buy it. But collectively, it happens. And today, we find ourselves owners of one of the largest translation organizations in Canada. »
The company was taken over by its 70 employees at the end of 2021.
EQUIVALENT RESALE VALUE
As for the value of the sale, it would not be at a discount.
“It is not because the transferor sells to a cooperative or employees that he will sell for less,” assures François Morissette, Director of Cooperative Investments at Desjardins Capital.
There are several formulas: inc., coop, hybrid, or even NPO. In the case of the creation of a cooperative for example, it is little known, but there are specific and particularly attractive financial tools.
Desjardins Capital takes preferred shares in cooperatives and partially replaces the down payment. While buyers would normally have to shell out 20%, they bring only 5 or 10% down payment.
Added to this is a partner financial ecosystem, support, tax advantages, and even subsidies. In short, “there is money for good projects,” concludes Mr. Morissette.
Buyer workers celebrate the 30th anniversary of their company
An industrial company in Saint-Jean-Port-Joli, in Chaudière-Appalaches, managed to save jobs in the village by selling to its employees. And it’s been going on for 30 years.
“I am convinced that the collective takeover is one of the avenues of the future that will save businesses,” says André Laurendeau, president of the Promo Plastik cooperative.
The 20-worker SME will celebrate its 30th anniversary in November. A feat for the printer of the effigies of the Carnival of Quebec who knew how to defy the Asian competition and maintain the company in its municipality of origin. However, the story could have turned out very differently.
In 1992, Monika Gagnon was in the process of buying out the Promo Plastik division from her brothers, the fruit of the Plastiques Gagnon family business. But she becomes pregnant and decides to stop working. Two competitors want to buy out.
“THE JOBS WERE GOING TO LEAVE”
“But they were all from Montreal, and all the jobs were going to go. It was lost work, with unique expertise,” says Ms. Gagnon. No question for her of losing what her father and grandfather had built so hard in the village.
It offers its employees to buy out, in the form of a workers’ cooperative. “I told them: if it’s profitable for me, it’s profitable for you. We owed them a severance bonus, it was the cash to buy it back at a price that suited us,” recalls the businesswoman, who is delighted with the longevity of the business sold.
CO-OPS SURVIVE MORE
An exception ? It would seem not. A study by the Quebec Council for Cooperation and Mutuality published in early September shows that cooperatives are particularly resilient. They are 80% to pass the milestone of three years of existence, against 48% for Quebec companies. After 10 years, while only one business in five survives, nearly one cooperative in two survives (44%).
The majority of business transfers end in failure, recalls Pierre Graff, CEO of the RJCCQ. The challenge is therefore to find buyers, but also that they last. In this sense, “the collective would be favorable for the transfer to end in success” because it makes it possible to retain complementary talents, which are the strength of a company.