Significant ownership changes anticipated in private sector
- CICA/RBC Business Monitor
TORONTO, May 5, 2010 Significant ownership
changes lie ahead for Canada's private sector, according to
executive-level Chartered Accountants (CAs) surveyed as part
of the latest CICA/RBC Business Monitor.
Almost one-third (31 per cent) of private sector CAs surveyed
expect their company to have a new owner in the next five
years. Respondents indicated that the top challenge to succession
planning is receiving the appropriate value for their business
(35 per cent), followed by finding the right successor (28
"When it comes to transferring or selling their companies,
business owners want to make sure that they get the best value
for their company," said Christianne Paris, vice-president,
Client & Business Strategy, RBC Royal Bank. "They
also want to be confident that their business is in capable
hands in order to continue their legacy, which is why it's
important to start the process of grooming a successor early
on and set realistic expectations."
Among those expecting new ownership within five years, selling
to a third party is the most common method anticipated for
transitioning the business (47 per cent), followed by transferring
the business to family members (13 per cent). Only eight per
cent believe their company will go public within the next
The study found that many companies expecting an ownership
change within five years have not yet planned for the next
stage of their business. Eighteen per cent have yet to initiate
discussions on succession, while 42 per cent have only discussed
the matter. One-in-five (20 per cent) indicated that a formal
plan has been initiated, but only 14 per cent said a succession
plan has been fully completed.
"Successfully transitioning a business requires considerable
advanced planning, so it will be important for companies to
act soon to avoid leaving money on the table," said Anthony
Maiorino, vice-president and head, RBC Wealth Management Services.
"Owners who plan in advance are better positioned to
provide for their family's future, minimize future tax liability
and improve the financial stability of the business."
About the CICA/RBC Business Monitor
The CICA/RBC Business Monitor is issued quarterly,
based on a survey conducted by the Canadian Institute of Chartered
Accountants (CICA). The report draws upon business insights
of CAs in leadership positions in privately and publicly held
companies across Canada.
The succession planning findings were based on responses
from 249 executive CAs in the private sector. The margin of
error associated with this number of responses is ±
6 per cent, with a confidence level of 95 per cent. Succession
planning was among a series of topics addressed in the full
CICA/RBC Business Monitor survey. Close to 400 individuals
from both the private and public sector participated in the
full survey which was conducted March 9 - March 18, 2010.
The Canadian Institute of Chartered Accountants (CICA),
together with the provincial, territorial and Bermuda Institutes/Ordre
of Chartered Accountants, represents a membership of approximately
75,000 CAs and 12,000 students in Canada and Bermuda. The
CICA conducts research into current business issues and supports
the setting of accounting, auditing and assurance standards
for business, not-for-profit organizations and government.
It issues guidance on control and governance, publishes professional
literature, develops continuing education programs and represents
the CA profession nationally and internationally. CICA is
a founding member of the International Federation of Accountants
(IFAC) and the Global Accounting Alliance (GAA).
About RBC Wealth Management
RBC Wealth Management directly serves affluent and high-net-worth
clients in Canada, the United States, Latin America, Europe
and Asia with a full suite of investment, trust and other
wealth management solutions. For business owners, RBC Wealth
Management provides succession planning, business financing
advice, tax planning, personal retirement, philanthropy, insurance
and estate planning.
The business also provides asset management products and
services directly and through RBC and third-party distributors
to institutional and individual clients, and has more than
$490 billion of assets under administration, nearly $240 billion
of assets under management and more than 4,500 financial consultants,
advisors, private bankers and trust officers.
About RBC Business Financial Services
RBC Business Financial Services offers a wide range of lending,
leasing, deposit, investment, foreign exchange, cash management
and trade products and services to small and medium-sized
businesses and commercial clients across Canada. RBC's extensive
business banking network includes approximately 99 business
banking centres and 1193 branches across the country.
- 30 -
For more information, please contact:
RBC Corporate Communications, (416) 974-9334
RBC Media Relations, (416) 974-2124