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Wealth Management

Your needs

Plan your business succession

Plan your business succession

It may take several years from the time you decided to transfer your business to the time it actually happens. This complex process requires vision regarding your goals, family needs and business growth.

  • What's your motivation:
    • Reducing stress
    • Retirement
    • Freeing up capital or retirement income
    • Letting your kids take over
  • Gauge the interest for taking over the business of the people around you (children, employees, associates or even competitors).
  • Choose your future:
    • Full retirement
    • Remaining active in the business as a consultant, coach or advisor
  • Analyze your concerns:
    • Getting a fair price
    • Minimizing the fiscal impact of the sale or of your premature death
    • Contributing to the well-being of your employees
    • Focusing on the longevity of the business
    • Keeping the business in the family
    • Preserving family harmony
  • Facilitate the succession and long-term prosperity of your business:
    • Ensure that key-personnel remains in place.
    • Optimize the value of your business at the time of succession.
    • Continue managing the business as if it was still yours for several more years.
      • In case of a partner’s death, disability or critical illness, plan to buy their shares.
      • Protect your business from financial loss due to a key person’s death or critical illness.
  • Surround yourself with experts:
    • attorney and accountant
    • financial planner (personal finances)
    • notary (Civil Code and will)
    • financing specialist
    • Financial security advisor (life and health insurance)
  • Create a family council to preserve harmony:
    • Identify potential problems and gauge everyone's interest in participating in the future of the business.
    • Evaluate people's interest in taking over the business and provide an equitable inheritance for children who won’t be taking over the business.
    • Discuss the succession.
    • Keep lines of communication open.
    • Manage tension and expectations.
  • Prepare those taking over:
    • Help them develop their skills (e.g., leadership, technical and administrative knowledge, business networks).
    • Share your knowledge and experience with them.
  • Identify your income sources at retirement and assess the necessity of opening an Individual Pension Plan (IPP).
  • To complete the process, you identified:
    • the structure of the transfer: sale, reorganization of capital, estate freeze with or without a trust
    • the succession order
    • financing
    • your future role in the business
  • An estate freeze:
    • freezes your financial participation in the business by exchanging your common shares for preferred shares
    • transfers future capital gains to the new owners
  • Created after an estate freeze, a discretionary trust makes it possible to:
    • hold new common shares
    • have more latitude in choosing who will take over the business
    • increase capital gains exemptions
  • More to consider:
    • shareholder agreement
    • payment terms of the proceeds from the sale
    • evaluation and desired price
    • negotiation of price and conditions
    • buyer's diligence
    • eligibility for the capital gains exemption
    • fiscal impact of scenario:
      • selling assets
      • selling shares
  • Plan your retirement:
    • Decide on your plans and lifestyle when you are retired.
    • Evaluate future income and expenses, including:
      • payments from the business
      • your Individual Pension Plan (IPP)
      • personal investments
    • Consider the capital from the sale of the business.
  • Efficiently manage your sources of income:
    • Reduce the tax on your withdrawals from registered accounts based on the type of income they generate.
    • Optimize income splitting between family members.
  • If a part of your capital is invested in your old business:
    • Diversify your investments since your business capital is not liquid.
    • Choose liquid, secure personal investments.
  • If you aren't entitled to benefits from an employer pension plan or Individual Pension Plan (IPP), plan for a life annuity to ensure long-term income.
  • If you have significant capital in a trust or non-registered accounts:
    • Focus on tax-efficient investments.
    • Consider Chorus II Portfolios with Income Option to adjust your withdrawals.
  • Meet your financial planner1 who will:
    • help you with the thought process
    • put you in touch with our business succession experts
  • See Business transfer.
  1. Desjardins financial planners act on behalf of Desjardins Financial Services Firm Inc.