Wave of business deals will reshape Alberta economy, study says
Nearly half of Alberta businesses expected to change hands in next five years, BDC predicts
A major wave of transition is coming to Alberta businesses within the next five years — a study done by the Business Development Bank of Canada (BDC) is predicting that 45 per cent of Alberta entrepreneurs intend to sell or leave their businesses by 2022.
According to chief economist Pierre Cleroux, most of those people are aging baby boomers who are looking to retire.
And on the other side, BDC's research shows there are plenty of buyers ready to strike a deal.
"They believe that buying another business is a great way to scale up their business," said Cleroux.
"They are buying, for example, a competitor because they want to consolidate their market. A lot of businesses are looking to buy a business in another geographic centre so they extend their market."
Energy industry could see most change
The biggest upswing in the coming years may be in the energy industry where Cleroux said many companies are looking for opportunities to grow their business.
"The percentage is much bigger than in other sectors, so I think in the next two years, as the oil prices come back, we're going to see a lot of activity in this sector," said Cleroux.
The trend has already been noticed at the Calgary Chamber of Commerce (CCC).
Scott Crockatt, the CCC's director of communications, said plenty of business owners are looking to sell or are thinking of selling.
Fortunately, he said, there are buyers at hand and in particular, younger entrepreneurs.
"We can see from some of the data that entrepreneurs who are in expanding businesses are looking at growth by acquisition as a way to expand further," said Crockatt.
"That's really quite exciting for a business community and if this accelerates in Calgary, I think that that's supportive for us, for our overall economy."
Entrepreneurs should have a plan
The BDC estimates that some 300,000 businesses in Canada will change hands in the next five years.
Only 26 per cent of those business owners will want to sell to a family member, so the majority will go to someone not related to the owner.
Crockatt said even if entrepreneurs aren't planning to immediately sell, they should have a plan.
He said organizations like the CCC can point people to business transition specialists or business brokers.
"A lot of these conversations begin with your business's professional supporters: your lawyers, bankers and accountants, as those folks know the fundamentals of your business," said Crockatt.
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