Significant ownership changes anticipated in private sector - CICA/RBC
Business Monitor

TORONTO, May 5 /CNW/ - Significant ownership changes lie ahead for Canada's private sector, according to executive-level Chartered Accountants (CAs) surveyed as part of the latest CICA/RBC Business Monitor.

Almost one-third (31 per cent) of private sector CAs surveyed expect their company to have a new owner in the next five years. Respondents indicated that the top challenge to succession planning is receiving the appropriate value for their business (35 per cent), followed by finding the right successor (28 per cent).

"When it comes to transferring or selling their companies, business owners want to make sure that they get the best value for their company," said Christianne Paris, vice-president, Client & Business Strategy, RBC Royal Bank. "They also want to be confident that their business is in capable hands in order to continue their legacy, which is why it's important to start the process of grooming a successor early on and set realistic expectations."

Among those expecting new ownership within five years, selling to a third party is the most common method anticipated for transitioning the business (47 per cent), followed by transferring the business to family members (13 per cent). Only eight per cent believe their company will go public within the next five years.

The study found that many companies expecting an ownership change within five years have not yet planned for the next stage of their business. Eighteen per cent have yet to initiate discussions on succession, while 42 per cent have only discussed the matter. One-in-five (20 per cent) indicated that a formal plan has been initiated, but only 14 per cent said a succession plan has been fully completed.

"Successfully transitioning a business requires considerable advanced planning, so it will be important for companies to act soon to avoid leaving money on the table," said Anthony Maiorino, vice-president and head, RBC Wealth Management Services. "Owners who plan in advance are better positioned to provide for their family's future, minimize future tax liability and improve the financial stability of the business."

About the CICA/RBC Business Monitor

The CICA/RBC Business Monitor is issued quarterly, based on a survey conducted by the Canadian Institute of Chartered Accountants (CICA). The report draws upon business insights of CAs in leadership positions in privately and publicly held companies across Canada.

The succession planning findings were based on responses from 249 executive CAs in the private sector. The margin of error associated with this number of responses is +/- 6 per cent, with a confidence level of 95 per cent. Succession planning was among a series of topics addressed in the full CICA/RBC Business Monitor survey. Close to 400 individuals from both the private and public sector participated in the full survey which was conducted March 9 - March 18, 2010.

About CICA

The Canadian Institute of Chartered Accountants (CICA), together with the provincial, territorial and Bermuda Institutes/Ordre of Chartered Accountants, represents a membership of approximately 75,000 CAs and 12,000 students in Canada and Bermuda. The CICA conducts research into current business issues and supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government. It issues guidance on control and governance, publishes professional literature, develops continuing education programs and represents the CA profession nationally and internationally. CICA is a founding member of the International Federation of Accountants (IFAC) and the Global Accounting Alliance (GAA).

About RBC Wealth Management

RBC Wealth Management directly serves affluent and high-net-worth clients in Canada, the United States, Latin America, Europe and Asia with a full suite of investment, trust and other wealth management solutions. For business owners, RBC Wealth Management provides succession planning, business financing advice, tax planning, personal retirement, philanthropy, insurance and estate planning.

The business also provides asset management products and services directly and through RBC and third-party distributors to institutional and individual clients, and has more than $490 billion of assets under administration, nearly $240 billion of assets under management and more than 4,500 financial consultants, advisors, private bankers and trust officers.

About RBC Business Financial Services

RBC Business Financial Services offers a wide range of lending, leasing, deposit, investment, foreign exchange, cash management and trade products and services to small and medium-sized businesses and commercial clients across Canada. RBC's extensive business banking network includes approximately 99 business banking centres and 1193 branches across the country.

For further information: Claire Holland, RBC Corporate Communications, [phone]; Matthew Gierasimczuk, RBC Media Relations, [phone]