The Succession Gap: Industries in Canada Facing a Generational Exit

Retiring owners, thin succession plans, and widening talent shortages — a practical, sourced briefing for founders, investors, and policymakers.

🔍 Executive Summary: The Succession Crisis

Canada is on the cusp of a massive generational transfer of business ownership. Baby‑boomer entrepreneurs – many of whom built their companies in the 1970s and 1980s – are now nearing retirement.

Statistics Canada’s 2021 data shows that more than half (55 %) of all Canadian enterprises are controlled by owners over 50 (www150.statcan.gc.ca).

In some sectors, the share of older owners exceeds 70 %, yet surveys by MNP, CFIB and the Northern Policy Institute reveal that only a small minority have a written succession plan (www150.statcan.gc.ca, mechanicalbusiness.com).

This report digs into the numbers to identify which industries are most exposed to the “succession gap,” explores why it matters for jobs and economic resilience, and offers practical strategies for founders, investors and policymakers to ensure a smooth transition.

🧩 Context & Why Succession Planning Matters

Demographic headwinds

Canada’s demographic clock is ticking. The proportion of Canadians aged 50+ climbed to 37.5 % in 2024 and is projected to reach between 38.6 % and 49.4 % by 2065 (talentcanada.ca). This aging trend is mirrored among business owners; in 2020 the average age of a Canadian business owner was 53.5. As more founders look to exit, there simply aren’t enough young entrepreneurs to replace them, driving what economists call a “silver tsunami” of ownership transfers.

Importance of small and medium‑sized businesses

Small and medium‑sized enterprises (SMEs) are the backbone of the Canadian economy. They represent 98 % of all employer businesses and employ 46.5 % of the private‑sector workforce.

Nearly two‑thirds (63.8 %) of private‑sector jobs depend on SME owners preparing for succession (talentcanada.ca). A poorly managed transition not only jeopardizes personal wealth for retiring owners but threatens jobs, local tax bases and community services.

The planning deficit

Despite looming retirements, planning remains an afterthought. MNP’s 2024 Succession Readiness Report found that 64.1 % of business owners have thought about exit but haven’t formalized a plan and 20.7 % haven’t even started (mechanicalbusiness.com).

Fewer than one in ten owners (8.5 %) have actionable succession goals (talentcanada.ca). A 2023 Canadian Federation of Independent Business (CFIB) survey echoed this concern: 76 % of small business owners plan to exit within the next decade, yet only 9 % have a formal succession plan (cfib-fcei.ca). With over $2 trillion in business assets poised to change handscfib-fcei.ca, the stakes could not be higher.

💡 Key Succession Insights

1. Industries with the oldest owners are most vulnerable. Statistics Canada’s 2021 table on business ownership by age reveals that in some sectors more than two‑thirds of enterprises are run by owners aged 50+. The management of companies and enterprises (holding companies) has an 84 % older‑owner share, public administration 76 %, utilities 74 % and finance & insurance 71 % (www150.statcan.gc.ca). Agriculture, wholesale trade, mining, real estate and manufacturing all exceed 60 % (www150.statcan.gc.ca).

2. Agriculture faces a special succession crisis. Royal Bank of Canada (RBC) estimates that 40 % of Canadian farm operators will retire by 2033 and 66 % of producers lack a succession plan (mnp.ca). This could leave a shortfall of 24,000 general farm, nursery and greenhouse workers (mnp.ca) and threatens the transfer of $53 billion in farmland. A survey for Ontario’s Business Confidence Survey found that 80 % of respondents in the agriculture/forestry/fishing/hunting sector lack a succession plan, compared with 63 % across all industries.

3. Financial advisors aren’t prepared either. An Investment Planning Counsel and Environics study of independent financial advisors discovered that almost 90 % lacked a formalized succession plan (environics.ca). This exposes clients and employees to disruptions when advisors retire and underscores the vulnerability of the finance and insurance sector, where 70.8 % of businesses are owned by people over 50 (www150.statcan.gc.ca).

4. Small firms are least prepared. Northern Policy Institute’s survey of Ontario firms shows that 50 % of organizations with 500+ employees have a succession plan, compared with only 20 % of those with fewer than 100 employees. Forty percent of small organizations (0‑99 employees) neither have a plan nor are creating one. The research concludes that many owners expect to sell or retire within 10 years yet have not established an exit strategy.

5. Obstacles include valuation and finding a successor. CFIB notes that 54 % of owners say their biggest hurdle is finding a suitable buyer; 43 % struggle to assess the value of their business and 39 % say the business is too reliant on themcfib-fcei.ca. Nearly one‑quarter (24 %) rely on lawyers, 43 % on accountants and 39 % attempt to create a succession plan on their own (cfib-fcei.ca). These gaps suggest many exits are rushed, resulting in undervalued sales or closures.

6. Labour shortages compound the succession gap. Canada already faces severe shortages in skilled trades and specialized sectors. In the electricity sector, the retirement rate is 1½ times the national average (electricalindustry.ca), and more than one in five working‑age adults nationally is nearing (retirementelectricalindustry.ca). MNP warns that retirements in agriculture will ripple through machinery suppliers, retailers and specialty services, while CFIB stresses that protecting employees is the top priority for 90 % of ownerscfib-fcei.ca.

7. Employee share ownership plans (ESOPs) are underused. Tools like employee share ownership plans (ESOPs) and employee profit‑sharing plans (EPSPs) can facilitate a smooth transition, retaining key staff while distributing wealth. Yet these tools remain under-utilized; fewer than 10 % of businesses have adopted them (talentcanada.ca).

🛠 How Succession Planning Works

Succession planning is a multi‑year process, not a one‑time event. A robust plan typically includes the following steps:

1. Assess readiness and goals. Owners identify personal timelines, financial objectives and desired legacy. CFIB’s survey shows that stress, burnout and debt influence exit timingcfib-fcei.ca, so clarifying motivations is critical.

2. Value the business. Independent valuation helps owners understand what their business is worth. 43 % of owners struggle to determine value (cfib-fcei.ca), suggesting professional help is essential.

3. Choose a succession path. Options include family transfer, management buyout, employee ownership (ESOP/EOT), or third‑party sale. Each path has different tax, financing and governance implications.

4. Develop talent and transfer knowledge. This includes identifying future leaders, providing mentorship and training, and documenting processes. In the electricity sector, knowledge transfer is urgent because of the high retirement (rateelectricalindustry.ca).

5. Finance and structure the transition. This can involve vendor take‑back loans, bank financing, government programs (e.g., BDC’s succession financing or FCC farm transfers), or creating an employee ownership trust.

6. Implement and monitor. Once the transition begins, owners gradually reduce involvement while coaching successors. Regular reviews ensure the plan remains aligned with changing market conditions and tax laws.

📊 Data, Trends & Case Studies

Canada’s industry-by-industry exposure to the succession gap is stark in Statistics Canada’s 2021 breakdown of enterprises by owner age. In that table, “management of companies and enterprises”—largely holding companies—has the highest concentration of older owners: about 84% are aged 50+. That density suggests many investment vehicles could be sold, merged, or wound down as founders retire, increasing the volume of ownership changes coming through this channel. (Source: StatCan Table 33-10-0854-01, “Number of enterprises in Canada, by industry and age of owner,” 2021: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401.)

Public administration entities—often small consultancies, NFPs, or local administrative units—also show a very high older-owner share of ~76%. With leadership concentrated among late-career principals, these organizations face elevated exit risk and potential service disruptions if transitions are not planned early. (Source: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401.)

In utilities, about 74% of enterprises are owned by people 50+, and the sector carries an additional constraint: licensed, specialized operators are retiring faster than average—the retirement rate is roughly 1.5× the national average. That combination makes succession and knowledge transfer especially urgent for electricity and water operators. (Sources: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401; Electrical Industry, “Succession Management and Planning: Moving Forward”: https://electricalindustry.ca/changing-scene/11725-succession-management-and-planning-moving-forward/.)

Finance & insurance shows an older-owner share of ~71%. The risk here is compounded by advisor-level preparedness: an Investment Planning Counsel/Environics study found that nearly 90% of independent financial advisors lack a formal succession plan, raising continuity risks for client portfolios and staff when principals retire. (Sources: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401; Environics press release: https://environics.ca/press-room/90-per-cent-of-financial-advisors-lack-a-formalized-succession-plan/.)

In agriculture, forestry, fishing and hunting, approximately 69% of enterprises are 50+ owned, and multiple studies flag a pronounced cliff: RBC estimates ~40% of farm operators will retire by 2033 and that ~66% of producers lack a succession plan, implying stewardship and labour gaps (including an estimated 24,000 general farm/nursery/greenhouse roles). MNP’s farm-succession work echoes the need for earlier, structured transition planning. (Sources: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401; RBC “Farmers Wanted”: https://thoughtleadership.rbc.com/farmers-wanted-the-labour-renewal-canada-needs-to-build-the-next-green-revolution/; MNP farm-succession guidance: https://www.mnp.ca/en/insights/aq/farm-succession-a-bright-future-for-farmers-setting-the-stage-to-support-the-next-generation.)

Wholesale trade has an older-owner share of ~66%. Without a pipeline of next-generation owners, wholesale networks risk consolidation or closures as principals retire—particularly where customer relationships and supplier terms are anchored to the owner. (Source: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401.)

In mining, quarrying, oil & gas, about 64% of enterprises are owned by people 50+. High capital intensity, remote geographies, and permitting complexity limit new entrants, so inadequate succession planning can translate into shuttered capacity or forced sales to larger operators. (Source: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401.)

Real estate & rental/leasing shows ~62% 50+ ownership. Many family portfolios rely on informal governance; formalizing governance and succession (boards, mandates, shareholder agreements) reduces the risk of distressed or tax-inefficient sales during intergenerational transfer. (Source: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401.)

Manufacturing is at ~61% 50+ ownership. Combined with chronic skilled-trades shortages, weak succession planning increases the odds of plant closures or relocations instead of orderly transfers. Prioritizing management depth, apprenticeships, and capital-planning visibility helps keep facilities operating under new ownership. (Source: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401.)

Finally, construction shows a ~51% older-owner share—lower than the above sectors but still significant given the industry’s reliance on owner relationships for bonding, subcontractor networks, and repeat clients.

The CFIB reports that 54% of owners say their biggest hurdle is finding a suitable buyer, 43% struggle with valuation, and 39% say their firm is too dependent on them, all of which can derail or depress exit outcomes without early planning. (Sources: StatCan 33-10-0854-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310085401; CFIB media release: https://www.cfib-fcei.ca/en/media/over-2-trillion-in-business-assets-are-at-stake-as-majority-of-small-business-owners-plan-to-exit-their-business-over-the-next-decade.)

Case study: The farming succession cliff

RBC’s “Farmers Wanted: The Labour Renewal Canada Needs” report warns that Canada is heading into a farm succession cliff. The report estimates that 40 % of farm operators will retire by 2033, 66 % of producers lack a succession plan, and the resulting labour gap will leave 24,000 farm, nursery and greenhouse positions unfilled (mnp.ca).

MNP notes that younger producers face high capital costs and inadequate rural infrastructure, deterring new entrants (mnp.ca). Without early planning, large corporate buyers could scoop up family farms, reducing local ownership and threatening food security.

Case study: Financial advisors

The Investment Planning Counsel/Environics study surveyed nearly 360 independent financial advisors. It found that only 11 % had a formal succession plan, and 90 % sought dealer support to build one (environics.ca).

Many advisors plan to retire within five to ten years, but the lack of a formal plan threatens clients’ portfolios and the firms’ valuations. Professional guidance, client communication and early identification of successors are critical.

Case study: Ontario’s succession survey

The Northern Policy Institute partnered with the Ontario Chamber of Commerce to survey owners and non‑owners across sectors. Key findings include:

• Most owners expect to retire or sell within 15 years, yet 73 % do not have a succession plan.

• Smaller firms (0‑99 employees) are 36 % more likely to plan a sale within 10 years but 48 % less likely to have a plan compared with firms of 100–499 employees.

• Francophone‑owned businesses are over‑represented among organizations without a plan, suggesting language‑specific resources could help.

🧭 Strategy Playbook

For founders & current owners

1. Start early – at least five years before exit. Succession planning should align with personal retirement goals and market cycles. Owners who wait until health issues or market shocks force a sale often get lower valuations and have fewer optionscfib-fcei.ca.

1. Work with advisors. Engage accountants, lawyers, valuators and succession consultants. CFIB notes that only 43 % of owners consult accountants and 24 % consult lawyerscfib-fcei.ca, leaving many to navigate on their own.

2. Develop internal talent. Identify and mentor potential successors early, whether family members or key employees. Document processes and delegate responsibilities; this is especially important in sectors like utilities where institutional knowledge is at risk (electricalindustry.ca).

3. Explore employee ownership models. Employee share ownership plans (ESOPs) and the new federal Employee Ownership Trust (EOT) legislation can provide tax‑efficient exit strategies, retain employees and keep companies locally owned (talentcanada.ca).

4. Consider immigration pathways. CFIB suggests creating a succession-immigration stream to attract entrepreneurs willing to buy existing businessescfib-fcei.ca. This can be particularly valuable in rural areas where successor candidates are scarce.

5. Plan for taxes and estate. Utilize the Lifetime Capital Gains Exemption and family trust structures. CFIB advocates raising the exemption to $1.2 million for all SMEs to encourage intergenerational transfers (cfib-fcei.ca).

For investors & buyers

1. Target sectors with high older‑owner shares. Industries like utilities, finance, agriculture, wholesale and real estate offer acquisition opportunities but require careful succession integration.

2. Leverage ESOPs and EOTs to structure deals. Investors can partner with employees to purchase businesses, ensuring continuity and social license.

3. Focus on rural and small‑town markets. 98.6 % of businesses in rural Canada are locally owned. Many are in construction and agriculture and are more likely to face talent shortages. Investors with long‑term outlooks can help sustain these communities.

4. Support modernization. Use acquisitions as an opportunity to upgrade systems, digitize operations and adopt automation, making the business attractive to younger workers.

For policymakers

1. Expand succession support programs. Enhance BDC’s Business Transition Financing program and provide grants for training and succession planning. Offer targeted support to industries with the highest older‑owner shares.

2. Incentivize ESOPs/EOTs. Provide tax deferrals or credits to owners who sell to employees. The U.S. experience shows ESOP companies tend to be more resilient and equitable.

3. Invest in rural infrastructure and training. MNP notes that high capital costs and inadequate rural services deter young farmers (mnp.ca); improving broadband, housing and community services can attract the next generation.

4. Develop a succession immigration stream. Allow experienced international entrepreneurs to buy Canadian SMEs, especially in farming, retail and manufacturing.

5. Raise awareness. Fund educational campaigns through chambers of commerce and industry associations. Many owners underestimate the time required to exit; awareness programs can change behaviour.

🇨🇦 Canadian Angle

Canada’s succession challenge is uniquely shaped by our demographic, geographic and policy landscape:

• Regional concentration: Rural and northern communities are most exposed because they rely on a small number of locally owned businesses. Over 98 % of rural businesses are locally owned. Closures in farming, construction or retail can devastate local employment and supply chains.

• Immigration as a solution: Canada’s immigration policies can help fill the succession gap. Encouraging immigrant entrepreneurs to acquire existing businesses not only preserves jobs but leverages newcomers’ skills and networks.

• Government programs: Business Development Bank of Canada (BDC) offers transition financing, while Farm Credit Canada (FCC) provides intergenerational loan programs. The federal government introduced employee ownership trusts in the 2023 budget to facilitate employee buyouts. Provincial initiatives, such as Ontario’s Francophone succession resources, aim to support minority‑language owners.

• Cultural factors: Many family‑owned enterprises were built on trust and handshake agreements rather than formal governance, particularly in real estate and hospitality sectors. As generational change accelerates, these businesses need modern governance structures and documentation.

🏁 Bottom Line

• A demographic time‑bomb: Canada faces a wave of retirements; in several industries more than two‑thirds of business owners are over 50 (www150.statcan.gc.ca).

• Planning deficit: Most owners lack formal succession plans. Surveys show that 64 % have no written plan (mechanicalbusiness.com), 90 % of financial advisors lack one (environics.ca) and only 9 % of small‑business owners have a formal plancfib-fcei.ca.

• Sectoral hotspots: Utilities, finance, agriculture, wholesale trade, mining, real estate and manufacturing are the most vulnerable sectors (www150.statcan.gc.ca). Agriculture faces the additional challenge of a projected 24,000‑worker shortfall (mnp.ca).

• Opportunities in adversity: With trillions of dollars in assets changing handscfib-fcei.ca, there is opportunity for investors, employees and immigrants to acquire established businesses and modernize them. Tools like ESOPs and EOTs can align incentives.

Call to action: Early planning, professional advice, talent development and supportive policy are essential to close Canada’s succession gap and preserve community prosperity.

If you liked this research, check out our other free research reports on the Canadian Financing ecosystem.

Risk Disclaimer and Intended Use: This guide is intended to act as an educational resource, - not a definitive recommendation. Please reference underlying sources directly for further details. This guide is not a recommendation to raise capital from investors, US-based or otherwise. If you need advice for your business, you are welcome to contact us for a referral.