Across Canada, entrepreneurs drive growth and innovation, and many are now preparing to pass on their life’s work, marking a major shift in Canada’s economy. In this episode of Smart Advice, host Carissa Lucreziano sits down with Iain Gallagher, Managing Director and Head of Mid-Market Investment Banking at CIBC. who shares his perspective on how the entrepreneurial landscape has evolved. Tune in for insights on the emotional and financial challenges of business succession, the importance of planning, preserving the legacy you’ve built, and preparing for the opportunities that come next.
[09:40] Iain: “What we really try and encourage our clients to do is have those conversations and really talk about what everyone's goal is and what's the best way of achieving that.”
[12:20] Iain: “As the business matures, grows, the number of people you have working for you increases. Owners really have to take a step back.”
[21:43] Iain: “We couldn't do what many entrepreneurs do, but similarly, they can't do what we do. So we really encourage people to get the right advisors around them and identify them early on, because again, never want to think of an entrepreneur, business owner, a family, being pushed into transactions when they're not prepared.”
Connect with Carissa Lucreziano on LinkedIn.
Iain Gallagher is the Managing Director and Head of Mid-Market Investment Banking at CIBC. With more than 25 years of experience, he has helped Canadian entrepreneurs navigate business succession, sales, and transitions. He focuses on helping owners realize the full value of their companies. Iain also ensures that the legacy they’ve built is protected. His experience covers industries like manufacturing, distribution, technology, and services.
Known for his thoughtful approach, Iain understands the emotional side of every business transition. He also recognizes the financial complexity that comes with it. He works closely with families and founders to ensure each step of the process reflects their goals and long-term vision. Through his leadership, he supports the next generation of Canadian business owners. He helps them plan with confidence, grow their businesses, and adapt to change.
Connect and learn more about Iain Gallagher on his LinkedIn.
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Carissa Lucreziano: Welcome to Smart Advice I'm CIBC’s Financial Advice Expert, Carissa Lucreziano.
For decades, I have been dedicated to the profession of financial advice that helps Canadians navigate growing their wealth, building financial stability for retirement, and leaving a lasting legacy.
Today, we are shifting the lens from your personal balance sheet to the engine that drives it: your business. Canada's business landscape is going through a tectonic shift. Over the next decade, an estimated 76% of business owners intend to exit or transition their business, but only 1 in 10 have a formal succession plan in place. That translates to trillions of dollars in economic value, thousands of jobs, and decades of sweat equity that are at stake. And many of those transitions could be forced, rushed or messy.
So in today's episode, we will explore how the Canadian entrepreneur has evolved and the dynamics of the entrepreneur of today. We will talk about the emotional, financial, and complex challenges business owners face when thinking about a transition, and the actionable steps business owners can take now, even if an exit is years away.
Joining me today is Iain Gallagher, Managing Director and Head of Mid-Market Investment Banking at CIBC. A seasoned expert who's spent decades helping Canadian business owners prepare for sale, connect with buyers, and realize the full value of their grit and passion. Iain has worked with hundreds of Canadian business owners and their families to guide them through the sale and succession of their business.
Iain, thank you so much for being here. Welcome to the Smart Advice podcast.
Iain Gallagher: Thanks, Carissa. It's so great to be here. My pleasure.
Carissa: I have always wanted to dedicate an episode to the Canadian entrepreneur. So I'm so looking forward to your insights and sharing your perspective.
Iain: Great. Well, I hope I can give your audience something different, something new, and hopefully some insights that they can learn from this.
Carissa: Let's start off with the big picture: the Canadian business landscape. It is changing. It has been in flux, for many years.
With your vast experience working with hundreds of Canadian businesses, their families, what's one shift that you've noticed for business owners in the past few years?
Iain: I think, Carissa, it's interesting. It's often thought of as a blessing when you live in interesting times. I think if you ask most Canadian entrepreneurs, they'd much prefer some boring times. The last five or six years have been far too interesting for a lot of entrepreneurs.
We went through the whole COVID period, which is very difficult, and brought a lot of change within the business environment. After that, we had that whole supply chain issue where folks found it very difficult to purchase, to get product on time, to get things onto shelves. And then we went into a period of inflation, it was very difficult to get the right people in terms of staffing. Now we've got some difficulties around tariffs and international trade.
So we found it's been a very tumultuous time. I think it's been very challenging for entrepreneurs. It's been tough to plan when you've got so many changing issues within the business. But despite all of that, we see that there's still very resilient Canadian-founded businesses and a sense of optimism among Canadian business owners.
Carissa: Yeah, absolutely. Let's talk about the business owners of today. 59% of Canadians are aspiring entrepreneurs, the highest level since 2017, and that really says a lot. It indicates a broad and diverse interest in business creation. So what kinds of businesses are being started today? And I'd love your perspective on who are today's entrepreneurs?
Iain: Yeah, well, I mean, it's a general comment. But young people are really interested in starting businesses. If you look at any of the university business programs now, the really successful courses, the really popular courses, are about entrepreneurship. About either starting a business or taking over a business.
We found a huge community of what we call search funds now in Canada, usually people between 25 and 35, who are looking to acquire a business from an existing, family-owned or entrepreneur-owned business. They're interested across the board, but we also see young people bringing quite a degree of creativity.
So we see things like lifestyle, branded businesses, food and beverage businesses. We've seen a lot of activity around wellness, mindfulness and health, and then a technology angle. Young people who've grown up in this digital age have a great understanding of technology and how it can bring benefits to your life. Looking at traditional legacy businesses and wondering how they can be approved with technology.
We have a client right now who's working in a real legacy business of produce distribution. It was a business that typically had very little technology angle to it. It was based in the GTA, very much down around the food terminal, and things have been working the same for the last 100 years.
What we're seeing now is that there's some younger companies that are bringing a technology angle to it. Really harnessing digital information, beginning to use some AI in their business, and creating a whole different type of business around it, which is really driving profit margins. Ultimately, it’s the goal of many entrepreneurs. So we're still finding that young people want to create businesses, start new things, or bring a different angle to it.
I think the other angle for Canada, which is, I find very interesting, and as an immigrant myself, we come across a huge amount of immigrant entrepreneurs coming into Canada, and it's been a real growth engine in that part of the economy. I think it comes for a lot of different reasons. I think immigrants come with a different viewpoint on the world. They have a slightly different take on how things are done. So they can sometimes bring that creativity, and it's become a real driver. there's great value to what the immigrant community has brought to Canadian business and the Canadian entrepreneur landscape.
Carissa: That's a great perspective. You mentioned technology, but those entrepreneurs that are starting today: what are the things that they have to think about like years ago or decades ago? When you started a business, you didn't have access to all of the technological pieces that they have today. So when somebody's starting out in a business, what are some of the very important foundations or linchpins that they'll have to think about or get ready for?
Iain: Yeah, so I think people starting businesses today have grown up. They are part of that digital era where they've never known a life without having access to the internet, having access to mobile technology. I think we see they're bringing that know-how and that skill set to both marketing and sales.
Looking at everything through a digital platform, in terms of how do they reach their client base? How do they open up their markets? We see it in terms of ERP systems. How do they do their business? You know, the days of people working through vast batches of paper are gone. Systems that are either off the shelf or can be built by technology, entrepreneurs are being applied to everyday businesses, and taking out a huge amount of cost and also the ease in which they can do business.
I think, then also their financial systems. This is something we come across an awful lot with entrepreneurs where sometimes their financial systems aren't as strong as they should be. But really folks harnessing, using virtual accounting programs, using inventory management systems, which really improves their business, gives them greater accuracy, helps them make big decisions. And by harnessing that, they're able to really grow their business at a much quicker scale than folks have done in the past.
Carisa: So as new business owners navigate those realities and think about all those things, many are thinking about the next chapter. Let's talk about succession and this huge transition wave that's happening.
I was astounded by the stats, and there's different stats out there, but three out of four businesses plan to retire within the next decade, and that really is because of the aging population. But this represents a significant mass transition across the Canadian business landscape.
So other than retirement, which is a big piece, are there other elements that are driving this wave, and what is the big opportunity?
Iain: Yeah, so I think as we think about succession, it's about the risk and an opportunity for the Canadian economy. I think for sure it's a risk that two-thirds or three-quarters of people are considering succession within their business.
Do we lose a whole class of entrepreneurs coming out? Well, that's the case. But also we're looking for people to replace them, and it means that people with new ideas, new approaches, are going to come into industry.
What we find, though, is that people don't give enough thought around the succession. How is it going to happen? Who is going to take up that succession for them? Within our day-to-day business, we deal with an awful lot of family-owned businesses around this time of year. We're very conscious.
Thanksgiving is a tough thing to do. Families get very worried and very stressed about where they're going to have their turkey, if they're going to have turkey, who's going to cook it, where they're going to eat it. You take that stress of family dynamics and you apply that to a complex business, you can only imagine how stressful it is running a family business.
Part of that is that there's never been big conversations in that family about what's going to happen in succession if mom and dad are going to retire. Do the kids want to take on the business? Is it something they're willing to do? Are they willing to take on that financial, both the burden and opportunity?
What we really try and encourage our clients to do is have those conversations and really talk about what everyone's goal is, and what's the best way of achieving that. Sometimes the answer is, well, the kids are interested in working in the business, but they don't want the burden of owning the business or investing in the business further, and sometimes folks need to bring in additional capital or potentially sell the business outright.
Another angle that we encounter an awful lot with entrepreneur-owned businesses is that they haven't prepped the business for succession. And I think there's an awful lot of work and a lot of change that happens between a business that's run for the entrepreneur, and then setting that business up for someone else's ownership.
Carissa: So, Iain, even if a business is years away from a potential sale, what should they do to be succession ready?
Iain: I think the most important thing entrepreneurs are involved in is every aspect of their business. As they think about succession, they have to let go of the reins a little bit. You know, if I could think of three things that I'd suggest for business owners to do, the first thing is: invest in financial systems and the reporting function. Maybe spend a little bit more in terms of the people you hire, the systems you use to ensure that you're getting timely, accurate financials every month.
The second thing is, business owners have to learn to delegate. It's natural that entrepreneurs are very control oriented, but they've really got to let their team make big decisions, become real managers, because ultimately, the owner is not going to be there forever.
I think the last thing I'd recommend business owners to do is to share their relationships. Typically, entrepreneurs and business owners have key relationships on both the purchasing side and the sales side with their customers. But by allowing their management team to develop those relationships as well, their business becomes much more valuable. They're no longer the key relationship holder, and those relationships can be passed on to the next generation.
Carissa: You mentioned something interesting. I want to dig deep into getting your business sale ready, and there's an underpinning of that. We've had chats about this too, about understanding the true value of your business, or at least understanding where it's going. How do you get your business sale ready? What are some of the things that you have to think about? And then a little bit on that valuation, many businesses don't quite know, or maybe they think that they know what their business is worth, but how do they actually get a good idea?
Iain: Yeah, great question. So I think first around getting your business ready for sale. Part of being an entrepreneur means that you're involved in every aspect of the business. As the business matures, grows, the number of people you have working for you increases. Owners really have to take a step back. And I think part of that is around making themselves less dispensable.
When the business started, and part of the success, and the reason for the growth is around the owner being involved there. But we tried to challenge them around, how can they step back? They're not always going to be there. That might be a choice that they make, but sometimes it's a health related issue, a family related issue, where they can't be involved in everything they're once involved in.
So we look at the big buckets within the business around sales and marketing. Are they the one that has all the business relationships? How have they been able to push on those relationships to other people within the organization? Because ultimately, if they're not there, does the business still have the same relationships with their client base? And that's certainly what anyone's looking in a succession situation is how can we survive without the owner being there?
If we look at it from a finance perspective, many entrepreneurs don't invest, or they try and save money in the finance function. They typically look at their bank account at the end of a month or the end of the year. They're usually not big borrowers. They typically shy away from taking on too much debt, which is entirely reasonable, but as a result, their finance function isn't often fully developed.
Certainly when you go through the sale process or succession process, you have to have really strong financial reporting. You have to really understand how a business makes money, where the cost centers are, and ultimately, how the business makes a profit. Through any diligence exercise, we'll say that potential buyers spend most of the diligence time around that finance.
So are the numbers we're seeing real? How can we approach? Do you make all your money on a certain product or with a certain customer? What's your supply chain like? What's your working capital cost? Like, we're seeing that buyers really want to dig in on those financials, and unless you have a proper reporting structure and have invested into that, it's very difficult to get through a diligence process.
The other thing is just day to day management of the business. I think if entrepreneurs sell their business, there's typically a transition period we see somewhere between 12 and 24 months at the short end, and then, typically five years on the longer end. But ultimately, an entrepreneur and owner has to be ready to hand over the reins. The sooner they've done that, and if they can demonstrate to buyers that they have invested in management, and that the management team is there to take over the next phase of the business, the business is inherently more valuable.
Carissa: Those are great tips. I know you said something around ready to hand over the business.
In all of this, there is a huge emotional aspect. Financial is big. The operations is big. But the emotional aspect or connectivity of a business owner to their business. How do you guide entrepreneurs through getting ready to, maybe not let go, but release the reins, if you will? How do you get them to that point to almost freeing their mind to look at what the opportunities are ahead?
Iain: We joke within our team that part of our role is amateur psychologist. We understand the emotional connection that entrepreneurs have with their business. It's not quite one of their babies, but it's not far off. We've seen that time and time again. It's natural. Sometimes an entrepreneur has put so much of their life, so much of their energy, so much of their drive, so much of their financial well-being into a business, that they obviously have a huge connection with that.
What we like to spend a lot of time with clients talking about, what does a successful transaction look like for you? What's important for you? It's easy to say money and purchase price, of course, is important, but we know from years of doing this job. I've been selling businesses for more than 25 years. It's more than just money. Folks are very invested in, what's my legacy going to be? Is the business name going to continue? What's going to happen to my employees?
Entrepreneurs understand how valuable their employees have been to their success. We've heard time and again that employees, they want them to look at it not just as a job, but it's a community. It's their friends. It's their broader family. And entrepreneurs are worried about what happens to those employees after I'm gone. How will the new buyer treat them?
I had a client down in Windsor, Ontario, a number of years ago. We were close to selling his business around this time of year, in October, and he said, “You know, I just figured out over the weekend, I think about 800 people had Thanksgiving dinner from this business.” He reckoned that he had about 240-250 employees, and the average family size was 3.1-3.2 people. But he figured 800 people had a turkey dinner this weekend. What happens if they move that business down to the US or down to Mexico? What happens to that dinner? What happens to those people?
o we're very careful to spend time understanding what's important to the owners, above and beyond a purchase price. What are the terms? Are they required to stick around? Do they need to be part of the business going forward? What will happen to their key people? Are their people properly incentivized? Are their employees looked after? Is that sense of community going to remain?
And once we have that information, and the owner feels like we've got an understanding of that, well, then we can go out to potential buyers. Talk to them about the various aspects that the owner would like to see from a potential purchaser or a potential partner down the line.
Carissa: I'm sure, with 25 years of experience, you've seen transitions that have worked beautifully, and then some that were a little bumpy, to say the least, regarding business sale transactions. Talk to us a little about what stalls the process, and? what makes a transition go really smoothly?
Iain: Like lots of things in life, I think preparation is key. What is an owner hoping to get out of this succession? I think that's very important. We talk about, what does a successful transaction look like to them? Really trying to understand that.
We also want to talk to business owners about, what do you want to do? For many entrepreneurs, their businesses are a huge and very important part of their life, and for some people, as part of their identity as well.
Really want to challenge them to think about if I don't own it, am I stopping work tomorrow? Are you comfortable doing that? What if the buyer says, “we no longer require your services”? Are you okay with that? Are you willing to go through the transaction that would set that?
On the complete opposite end of that, if a buyer says, “Well, listen, we really need you around for five more years”. Is that something you're willing to do? Is that something you've talked to your family about? Does that fit with your ambitions for the rest of your life?
So before we get any way down the path in terms of a potential succession, we want to make sure that the business owner understands where they would like to be. What key decisions are they going to make before we go to buyers about their future. We then focus really on the business itself, and is the business ready for sale.
We give the analogy of selling your home. You'd never sell what your house looks like on a Tuesday morning when everyone's trying to run out the door, the cereal bowl still left in the sink. You'd never let people walk through your house and you’re there. If you're trying to sell your house, obviously you want to make sure it's in the best looking condition. You think about that paint job that you keep on putting off, the chipping paint on your front deck, a little bit of gardening that you should have done to make sure it's got the nice curb appeal.
Well, that often happens with business, and it's really no different. Both in terms of what does your plant floor look like? Are there changes that you haven't made, that you should have made? And then move around the infrastructure and the bones of the business. Have we got all those projects that we thought we'd do? Have we done them? Have we put in the ERP system? Have we gone through our financial reporting system? Are there quick changes we can make that will generate much more value?
Carissa: As a business owner, whether you're growing, you're scaling your business, or if you're thinking about succession planning, even if it's early, it's so important to have experts and professionals around the table that can guide you. And f this is the support that you provide Canadian business owners.
So who should be around the table for a business owner? If I'm a business owner, for example, how should I envision those experts and professionals working together around the table to help support me in my business?
Iain: Yeah, great question, Carissa. So I think we often talk about getting a SWOT team, and somewhat self-serving, but we think the right advice pays for itself. Really encourage business owners, we know they're very good at what they do. We couldn't do what many entrepreneurs do, but similarly, they can't do what we do.
So we really encourage people to get the right advisors around them and identify them early on, because again, never want to think of an entrepreneur, business owner, a family, being pushed into transactions when they're not prepared.
We often talk about, is the business ready? Are the shareholders ready? And then, is the market ready? You need those three things aligned for a successful sales process in terms of what we do and how we love to engage with clients early. It’s really just to talk about the broader process and to talk about plans.
We love talking to people over many years. We get to know them. They get to know us. We get to understand what's important about what they do. They get to learn more about the process and be informed about how it works, about being informed of changes they can make to their business. It means when they come to that point in their life where they decide to make a decision.
Sometimes that's an age milestone. Sometimes their life partner says, “Enough of this. It's time for us as a family or as a couple to spend more time together away from the business.” Sometimes it's health related. Sometimes they just get approached and someone offers them a price that they can't refuse.
But having those right relationships, so again, going back to your tax accountant, to your accountant in terms of your financial reporting, your lawyer, and then an M&A advisor. Having that team around you and being informed, I think puts you in a much better position when you finally make that decision.
Carissa: Absolutely, it's all about the relationship and the team that can surround your client.
Let's end with the business is sold, and now it’s thinking about their personal financial picture, because they now have the assets that they've worked so hard for over the years. And so how does business succession fold into personal financial picture?
How do you advise clients around that mindset of going from that business owner day-to-day, thinking about the business all the time, to now really thinking about their own personal wealth and the extension of that?
Iain: It is a big change and it's not necessarily that people are retiring. Certainly, a trend we've seen in our business is that business owners are selling younger. So this isn't necessarily the last kick of the can. But if we roll back, we will always advise people to start planning ahead of time.
Some business owners are nervous. They feel that they're going to jinx a transaction. They don't want to think about having this large influx of money coming into their life. I understand why folks can be stressed about that, but really it doesn't make sense from a planning perspective.
So typically, when we're two months out from closing, and we feel comfortable around we're going to sell this business, we've got an idea of what the purchase price is going to be. We understand what the proceeds are going to be. We really want to bring in again experts. And we've talked about having that transaction team and having the right advisors around you. Well, I think it's just important to have the right wealth people around you.
There's so many options there. There's so much noise for business owners if they're to come into significant wealth. Try to get the right team of advice around that, as it deals for your individual situation, really is crucial. Our approach is often to bring in the very best of what we call our CIBC Wealth Team. So we want people in terms of a full financial plan.
This is significant wealth. Typically, people want to look at their retirement. They want to look after their kids. They may want to make charitable donations. They may want to look at their insurance picture. They also want to make it the most tax efficient use of those proceeds. So understanding that ahead of time, and having big conversations, and not just having a one-on-one, but bringing other people. Bring your life partner into it. Bring your children into it. Really taking the time to think about what you're going to do with that wealth and how best it'll work for you.
I think we're always preaching about getting the right advisors around you and investing in the time to go through, let those people do their job and put you in the best position.
Carissa: Iain, thank you so much for being with me today. You have given so much great insight to anybody that's thinking about starting a business, entrepreneurs that are currently scaling, growing their business, and anybody starting to think about transitioning their business, and what the future holds, you've given them so much to think about. Thank you for sharing your expertise and the ways in which you work with Canadian entrepreneurs and families.
Iain: Thanks, Carissa. It was a real pleasure. I enjoyed it very much.
Carissa: Thank you for tuning in to Smart Advice. I'm Carissa Lucreziano. If you enjoyed this episode, feel free to share it with your social network. For fresh perspectives and actionable insights, subscribe to Smart Advice wherever you get your podcasts platform.If you're ready to explore the next chapter of your financial goals, visit cibc.com/smartadvice. To make sure you never miss an episode, follow Smart Advice on your favorite podcast platform. Thanks for listening.