Canadian Entrepreneurs Demographics Change

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FVCAA Presentation by Pirorooz Pourdad, CA, MBA at PwC

Published in: Business, Economy & Finance
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Canadian Entrepreneurs Demographics Change

  1. 1. Canadian Entrepreneur; Demographic Change & Your Business Presentation to: FVCAA
  2. 2. Introduction • Let’s Look at some data • Typical Entrepreneur • Why is this important to you? • Alternatives • Preparing the Company PricewaterhouseCoopers LLP 2
  3. 3. Status of Business Owners No. of Business Owners Age 55+ 400 %. of Business Owners Age 55+ 4.5% 000s Forecast 350 Avg. y/y change 4.0% 3.5% 300 3.0% 250 2.5% 200 2.0% 150 1.5% 100 1.0% 50 0.5% 0 1990 0.0% 1994 1998 2002 2006 2010 2014 Source: British Columbia Small Business Profile 2012 PricewaterhouseCoopers LLP 2018 1990-2000 2001-2012 3
  4. 4. How big of an impact on the economy? Employment Percent of GDP 27% 3.5m 15% 2.0m Within 5 years Within 10 years Source: British Columbia Small Business Profile 2012 PricewaterhouseCoopers LLP Within 5 years Within 10 years 4
  5. 5. Projected Retirement Date for Entrepreneurs No. of Business Owners Planning to Exit Breakdown of Exit Within Next Decade 600 000s 500 < 24 months 8% 400 No 51% 300 Yes 49% 2-5 years 20% 5-10 years 21% 200 100 0 Within 24 months Within 5 years Source: British Columbia Small Business Profile 2012 PricewaterhouseCoopers LLP Within 10 years 5
  6. 6. Total Value of Business Assets to Change Hands Between 2012-2017 $1.9 Trillion $190 billion in BC alone How Many are Your Clients? Do you Know Their Plans? PricewaterhouseCoopers LLP 6
  7. 7. Planning to Sell the Business % of Business Owners Planning Exit Within 5 Years By Region 40% 35% 30% Canadian Avg. 25% 20% 15% 10% 5% 0% Atl. Que. Source: British Columbia Small Business Profile 2012 PricewaterhouseCoopers LLP Ont. Man./Sask. Alta. B.C. 7
  8. 8. The Next Generation of Family Businesses Existence of Succession Plan Don't know 14% No 59% Yes, an informal plan (unwritten) 21% Yes, a formal written plan 6% Source: Canadian Federation of Independent Business PricewaterhouseCoopers LLP 8
  9. 9. Typical Entrepreneur 67% have not broached the subject with family or business partner. • Focused on business • “Exit Strategy” not on the agenda • The process is not known PricewaterhouseCoopers LLP 9
  10. 10. Why is this important to you? • This change is inevitable • Change provides opportunities: - Estate planning services - Managing the proceeds - Insurance products - Commercial lending PricewaterhouseCoopers LLP 10
  11. 11. Alternatives • Retain Ownership • Sell the Business PricewaterhouseCoopers LLP 11
  12. 12. Alternatives Retain Ownership • Prepare the family • Empower management • Stewardship v. Ownership PricewaterhouseCoopers LLP 12
  13. 13. Alternatives Sell the Business • Financial buyers • Strategic buyers • Management buy-out PricewaterhouseCoopers LLP 13
  14. 14. Sell the Business Financial Buyers • Pricing • Advantages • Disadvantages PricewaterhouseCoopers LLP 14
  15. 15. Sell the Business Strategic Buyers • Pricing • Synergies – Quantify them – Share them – One-time costs – Negative synergies • Advantages • Disadvantages PricewaterhouseCoopers LLP 15
  16. 16. Sell the Business Management Buy-Out • Pricing • Advantages • Financing sources PricewaterhouseCoopers LLP 16
  17. 17. Preparing the Company • Build a strong management team • Consider splitting off high value real estate • Maximize earnings “tract records” • “Clean up” the balance sheet • Plan new capital investments • Observe industry “cycles” • Ensure MIS is in place • Commission “Phase I” environmental assessment PricewaterhouseCoopers LLP 17
  18. 18. Thank you

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