The U.S. mid-terms are in sharp focus this week as the world awaits the outcome of what is, no exaggeration, one of the most important elections in the country’s history. What happens this week could determine the course that not just the U.S. takes, but the rest of the world.
It’s against this grim backdrop that a bit of positive news is brewing here in Canada. In 2024, the federal government enacted new legislation that makes it possible for business owners to sell their companies to trusts owned by their own employees. Earlier this year, the feds followed up by making permanent an incentive that exempts the first $10 million of such sales from capital gains tax.
We here at Do Not Pass Go firmly believe this is a rare good news story that relates to the two biggest challenges Canada is currently facing – sovereignty and affordability.
Employee-owned trusts, or EOTs, give business owners a new avenue to exit that isn’t selling to a competitor, often a larger one, or to private-equity firms that are usually in the process of rolling up and consolidating sectors. Selling to an EOT keeps more competitors in the market – which affects choices, employment terms and options, and prices – and it keeps businesses Canadian-owned.
So far, seven Canadian companies have converted to an EOT or declared their intention to do so. With the legislative and taxation runway cleared, many more are expected – potentially up to 100 per year.
Those companies, EOT proponents and the emergent supportive industry around them recently convened for the third annual employee ownership conference in Vancouver. We covered that conference here last week – check out that story – and in this episode, we dive deeper into how the EOT phenomenon arrived in Canada, what the potential benefits may be, and what their future holds.
The goal is as ambitious as it gets: to transform the Canadian economy.
We speak with Craig Busch, head of Barrie, Ont.-based waste bin manufacturer Busch Systems about becoming the seventh Canadian EOT, as well as two U.K. company founders – Robert Postlethwaite and Dr. Shelley Poole – about their respective experiences in selling firms to their employees.
Plus, Vancouver School of Economics professor Kevin Milligan weighs in, as does Jon Shell, vice-chair of Employee Ownership Canada and director of Aunty Combines Media, the parent company of Do Not Pass Go.
