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The changes come as many older business owners consider selling their companies to retire or pursue other interests. A recentshows almost 8 of 10 business owners surveyed last summer are developing a succession plan or expecting to transition the business to the next generation within three years, with more than quarter of them saying they plan to sell their companies.
“It requires a broader involvement of the next generation in actively managing the business … and a transfer to them of the economic interest and control of the company by the parent over time,” Mr. Waters of BMO Private Wealth adds. The CFIB, which lobbied for the EOT, notes similar structures are already in place in countries like the U.S. and the U.K.
Mr. Infanti of KPMG says the EOT provides a succession planning option and may be a useful tool to structure the sale of a business to an employee group. Still, he encourages business owners and their advisors to ensure they qualify. For instance, he says there are various governance and control matters to consider.
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