After a rough day at work, Aaron Schroeder went home and did some soul searching. He decided to put his long-simmering frustrations down in writing, which turned into an email to his team of 40 employees.
He told them what had been eating at him – that he believed there were two existential threats in the world: climate change and rising income inequality.
As the founder and chief executive of Brightspot Climate, a Calgary-based greenhouse gas consultancy, he was determined to do whatever he could to address both. His company was already working at the first problem, but his answer for the second was simple – he planned to sell the company to his employees.
“It was my Jerry Maguire letter,” Schroeder told a conference last week in Vancouver, referring to the 1996 Tom Cruise film in which the title character pens an analogous message to his sports agency co-workers after having a similar epiphany.
“I showed up at the office the next day and no one said a word – people were shocked,” he said. “They weren’t expecting to get that letter, but it started the conversation.”
Schroeder related the story as part of a panel discussion at the third annual Employee Ownership Conference, where 175 attendees were celebrating a major win from earlier this year.
In 2024, the federal government introduced new rules that allowed for the formation of so-called employee-owned trusts (EOTs), complete with a capital gains exemption for owners on the first $10 million of a sale to such an entity. But that exemption was set to expire at the end of this year, until the government announced in April’s spring economic update that it was being made permanent.
EOT proponents were exhilarated with the news since it cleared the way – and created an enticement – for Canadian business owners to explore exit strategies that don’t involve being acquired and consolidated by competitors or private equity buyers.
Succession, Competition and Sovereignty
It’s a particularly poignant development given that Canada is facing a business succession crisis, with owners of up to three-quarters of small and medium enterprises (SMEs) planning exits over the next decade, representing $2 trillion of assets in play, according to Venture for Canada.
And it’s happening at a time when there is a major sovereignty push to keep Canadian businesses in Canadian hands.
So far, six companies in addition to Brightspot have converted to an EOT or have announced they are in the process of doing so: Toronto-based philanthropic consultancy Grantbook, Maple Ridge, B.C.-based social services provider Taproot, B.C.-based mapping firm Terra Remote Sensing, Toronto-based philanthropy-consulting firm KCI, Cambridge, Ont.-based transportation planning company Paradigm Transportation Solutions, and Barrie, Ont.-based recycling bin maker Busch Systems.
Around 20 more – many of whom were waiting to hear the fate of the tax exemption – are in the pipeline. Employee Ownership Canada, the non-profit advocacy group behind the conference, believes Canada will get to a rate of 100 conversions per year based on comparable numbers from the United Kingdom, where similar EOT rules were introduced in 2014. The U.K. currently has more than 3,000 EOTs.
Schroeder said that selling his ownership stake to his employees via a trust, which Brightspot completed in April, has been transformative. Employees, who effectively get free shares in the company for as long as they work there and therefore earn dividends if it performs well, are more engaged, motivated and entrepreneurial.
“They’re stepping forward with ideas and suggestions. I anticipated some of that, but not to the level that we’re seeing,” he said. “That connection to the company is important to them and we’ll see [how it turns out] in the numbers.”
Speaking on the same panel, GeoRadar Group founder Will Meredith said his company’s conversion to employee ownership in 2021 has had similar effects.
The Burnaby, B.C.-based ground scanning firm’s move predated Canada’s establishment of EOT rules, so it converted to a more traditional structure where employees purchase ownership shares – known as as Employee Stock Ownership Plan (ESOP). Nevertheless, the culture has similarly changed for the better and resulted in stronger growth and higher employee retention.
“It weeds out the people who are committed to your company versus those who aren’t,” Meredith said. “People seem to care more now.”
Different Flavours of Employee Ownership
Employee-Owned Trust (EOT): A trust acquires and holds shares on behalf of employees, often when a founder sells the business.
Employee Stock Ownership Plan (ESOP): A formal plan helps employees acquire company shares, often using employer contributions or borrowed funds.
Management-Led Buyout: Existing managers purchase the business from its current owners, often using loans or outside investment.
Co-operative: Members collectively own an enterprise formed to meet their shared economic or social needs.
Lower Sale Prices and Delayed Payouts
ESOPs and EOTs each have their pluses and minuses. In moving to either, the owner first gets the value of their business assessed. If they decide to sell to employees, they may get a lower payout than they would if they sold to a strategic or private equity buyer, who often put premiums on taking out competitors.
When sold to an EOT, the new trust owner effectively takes on debt to finance the purchase, which the company must then pay off over time. That usually means the seller doesn’t get their payout up front and all at once, which they generally would if selling to a competitor or private equity.
Sellers can mitigate some of this by involving a minority shareholder, but the entire process usually appeals only to those individuals who are okay with continuing to be involved with their company for some time.
A direct ESOP sale can avoid the debt problem, but it raises the question of what happens to employees’ shares if and when they leave since they don’t automatically revert back to the company. Problems can arise, especially if a departure is acrimonious, which means that businesses choosing this route need to plan carefully.
ESOPs are also out of reach for certain types of businesses because of their very nature. Speaking on a different panel at the conference, Taproot CEO Michael Fotheringham explained how his social services company first chose the ESOP option, but with many of his 800 employees not being high earners, few could afford to buy stock, so take-up was low.
The company then pivoted to becoming an EOT, thus giving shares to employees for free. The conversion was important either way, he said, because of how active private equity is in acquiring health-care service providers, especially in the United States. Taproot celebrated its first “dividend day” last month.
“This was a way of keeping our culture and honouring our past,” Fotheringham said. “This gives our employees comfort that we’re here for the long term.”
The Mood is Changing
Gary Chung, managing director and head of middle market mergers and acquisitions at Bank of Montreal, told conference attendees that the mood among SME owners who are looking to sell is shifting away from simply seeking the highest possible price.
BMO has worked with ESOPs in the United States, where the bank has seen sellers looking for greater certainty – any deal with an outside buyer can fall apart at any moment – as well as a way to preserve their legacies. That same interest is showing up in Canada, with business owners contacting BMO looking to make the EOT transition, especially since the tax incentive was made permanent.
“People aren’t necessarily seeking that last dollar,” Chung said. “That is increasingly a more dominant thought. Five or six years ago the primary thing was: go get the highest number.”
The vibes at the conference – next year’s event is in Toronto – was thus jubilant, with attendees uniformly believing that a positive structural change in the economy is underway. More jurisdictions are embracing the concept of employee ownership, with Denmark and Slovenia in the process of enacting EOT rules. At least another three Canadian companies, meanwhile, are expected to convert by the end of this year.
Echoing Schroeder’s Jerry Maguire letter, GeoRadar’s Meredith said he believes employee ownership is an important part of the cure for the world’s current economic problems.
“If everyone owned a little piece of the business they work for, we’d be in a better position than we are now,” he said.
We’ll have more on employee ownership on next week’s Do Not Pass Go podcast.
🎧 ON THE PODCAST THIS WEEK:
WILL U.S. MID-TERMS PUT ANTITRUST BACK ON TRACK?
The Trump administration derailed the growing global push against monopoly, but corruption oversight may return with a Democrat win
🕹️ ENTERTAINMENT
The issue of employee ownership came into unfortunate focus this past weekend following the news that game giant EA is shuttering Edmonton-based BioWare.
The company, which was purchased in December by a group comprised of Saudi Arabia’s Public Investment Fund, Silver Lake and Affinity Partners, says it is going to focus on its biggest brands, which includes the Battlefield franchise and its various sports properties, such as FIFA. EA is laying off 400 employees, with 50 of those tied to BioWare.
The studio, which was founded in 1995, has produced some of the games industry’s most well-regarded franchises, including Mass Effect, Dragon Age and Star Wars: Knights of the Old Republic.
NDP leader Avi Lewis condemned the news, blaming the shuttering on private equity’s playbook. He urged the federal government to help facilitate a sale of the studio to its employees.
“This is what [private equity] does. Buy up businesses, run them into the ground, and rip them apart for short-term profit,” he wrote on X/Twitter. “The developers at BioWare know how to run the studio. They know how to make the games we all love. They should be given the first opportunity — and the federal support — to buy it and run it themselves. And if we want to avoid the Mass Effect effect in Canada, we should be keeping private equity out, not welcoming it in.”
We’ll have more on BioWare shortly.
☎️ TELECOM
We’ve reported before on how telecom complaints have been skyrocketing, but it looks like we’ve only hit the tip of the iceberg.
The Commission for Complaints for Telecom-Television Services (CCTS) reports it received “an unprecedented” volume of complaints for 2025-26, with 53,195 filed – 79 per cent higher than the previous year. The ombudsman accepted 41,235 of those, which was up by 74 per cent.
The organization warned that, although its resolution rate remains relatively high at 87.2 per cent, processing times are growing.
“This increase reflects unprecedented demand for our impartial, effective and free complaint-resolution services,” the CCTS said in a release. “While we continue to resolve most complaints early in our process, complaints requiring conciliation or investigation are taking longer than usual because of the significant increase in volume.”
Consumer advocates have been warning for some time that Canada’s telcos are slashing customer support in favour of artificial intelligence chatbots, which is leading to the steadily climbing complaint numbers.
“I’m expecting the next CCTS report, and several after, to be an absolute bloodbath,” Open Media director Matt Hatfield correctly predicted to Do Not Pass Go last month. “Big telecom companies are sharply slashing their customer service departments, replaced many agents with AI, and complaints were spiking before that took full force.”
The carriers, meanwhile, object to the CCTS even backstopping their dwindling customer support. TELUS, in its lobbying with the Canadian Radio-television and Telecommunications Commission (CRTC), believes the ombudsman is illegal and should be done away with.
“The CCTS’ authority is rooted in an unlawful subdelegation of powers from the Commission,” the company has told the regulator, which oversees the CCTS.
Telecom fee whack-a-mole was on full display last week with news emerging that ROGERS is adding a 1.6-per-cent processing charge to customers paying their bills via credit card. While Rogers says the practice is increasingly common among merchants, it’s hard not to connect it to a decline in the company’s latest wireless revenue numbers. Rogers last week said that figure was down one per cent for the third quarter, with average revenue per user (ARPU) down 2.6 per cent. The blame was laid squarely at the feet of the Canadian Radio-television and Telecommunications Commission, which in June banned service activation, modification and cancellation fees. “These fees… were initially designed to recover specific costs within our business, and so we’re now moving back to finding alternatives for covering those costs,” chief financial officer Glenn Brandt told investors during the company’s earnings call. Whack!
✈️ AIRLINES
Remember when Air Canada tried to get out of paying compensation to a passenger by claiming that its chatbot was a separate legal entity responsible for its own actions? One would think the airline would have learned its lesson after a judge laughed the company out of court, but that doesn’t appear to be the case according to a story last week in the Toronto Star.
When retired teacher Michael Pogor recently booked a flight to Europe for himself and his family, he paid $56.75 for each of them to pick their seats. Except, when he checked his credit card shortly after completing the transaction, it turned out he had actually paid $91 for each.
When he contacted the airline, the explanation he received is that it was “dynamic pricing” that changed the seat cost in the few brief moments between selection and checkout.
Pogor got a refund after the Star story embarrassed Air Canada but, as air passenger rights advocate Gabor Lukacs told the paper, it’s clear the airline is still trying to blame the technology it uses “as a way of trying to make the passenger go away.”
Speaking of AIR CANADA, booking a ticket with the airline over the phone now costs an additional $30 per person. The airline is trying to push people to book their flights online, presumably so they can emulate the telcos and eliminate their existing customer service agents. (WESTJET and FLAIR also charge for phone service.)
⛷️ SPORTS & LEISURE
The lawsuits involving Vail Resorts are piling up, with another shareholder action the latest to take aim against the Colorado-based ski resort company.
The new case is from company shareholder Thomas Stewart, who says eight directors and chief executive Rob Katz have allowed a ski pass price-fixing scheme to run unchecked, which has exposed Vail to other lawsuits.
This case, filed on Oct. 5, is the second shareholder lawsuit, with both claiming that Katz and the directors failed to prevent behaviour that led to a pair of antitrust claims being filed against Vail earlier this year.
Those lawsuits allege that Vail – which owns 42 resorts around the world, including Whistler-Blackcomb in British Columbia – steered customers to its Epic Pass by steeply raising prices on daily tickets. The suits also allege that Vail effectively conspired with its chief competitor ALTERRA to raise prices by publicly signalling their intentions to one another.
The class-actions are seeking restitution for consumers while the shareholder lawsuits – known as derivative actions – are arguing that Katz and the directors harmed Vail Resorts itself. The shareholder cases are seeking reforms to corporate governance.
The company has denied wrongdoing in each of the cases.
🛒 GROCERIES
Food insecurity continues to grow unabated in Canada, with food bank visits hitting a new record of more than 2.3 million in March, according to an organization that tracks such numbers.
The visit numbers were up 8.7 per cent from a year earlier, Food Banks Canada says in its latest HungerCount report, with nearly 10 million Canadians – almost a quarter of the population – experiencing food insecurity.
The report notes that food prices have increased by about 30 per cent since 2021, with other studies noting that Canada routinely leads the G7 in food inflation.
The Competition Bureau has launched several actions and reviews into the sector, after noting in a 2023 report that the industry is dominated by LOBLAW, METRO and EMPIRE.
“The Bureau agrees that Canada needs more grocery competition. The Canadian grocery industry is concentrated,” the watchdog said in its report at the time. “While this is not the sole reason grocery prices are high, more competition in the industry could drive down prices.”
🏦 BANKING
Canada’s financial services watchdog is warning that the country’s banks are charging unclear fees that discourage competition. While fees are typically small, they’re not always obvious and together can add up to large amounts, according to a review by the Financial Consumer Agency of Canada (FCAC) released Friday.
“Canadians should be able to clearly understand what they are paying for,” said FCAC commissioner Shereen Benzvy Miller in a statement. “When fees make the full cost harder to see, it affects both affordability and competition.”
The federal government requested in last year’s budget that FCAC examine the structure, level and transparency of bank fees. The review’s key observations include:
Point-in-time disclosures do not always help consumers understand cumulative banking costs.
Consumers may not know the total cost of some transactions before completing them.
Personalized, usage-based information could help consumers better understand and manage fees.
Limited transparency around some fees, including foreign exchange costs and cross-border debit fees, may make comparisons more difficult.
FCAC said its findings provide evidence to help inform broader policy discussions “on transparency, comparability, switching and competition, including the potential benefits of consumer-driven banking.”
🚨 COMING UP
With cost-of-living protests sweeping across Europe and democracy eroding in several countries including the United States, the conditions for the western world’s backslide into authoritarianism are increasingly ripe. In her new book, Anti-Fascist Economics, University of Massachusetts Amherst economist ISABELLA WEBER lays out the playbook for a new New Deal that will de-subordinate governments from markets and restore a social order that can work for regular people. With the U.S. midterms just a week away, she joins the Do Not Pass Go podcast this Thursday to explain the urgency for all democratic governments to do so.
Hi Peter,
Thanks for writing about all different competition issues in this blog post.
Over the years there has been many employee owned firms to have been featured on 60 minutes in the US and in other media. It is amazing how little drama and how successful those firms have become. I am struck at time at how adversarial the relationship between management and labour at most other firms have become in the world. China has targeted a lot of bread and butter industries in the West. We might just wake up one day and find ourselves in the dog house with our economic market taken from us. Like television manufacturing that we use to do in Canada. The list long of lost business sectors.
For the telecom industry there are so many services they could sell consumers and still make a bigger profit without alienating the customer. Companies in Canada have forgotten how to delight customers or have never learned to go the distance in customer service.
Thinking outside the box is not in many Canadian companies ethos.