Preparing for the next chapter in construction: 2025 MNP Report

The reality of succession planning in the construction industry

*Article sponsored by MNP

In a new MNP report, 191 business owners in the construction industry were surveyed between September 24 and November 13, 2024. Conducted by Ipsos on behalf of MNP, the research findings reflect a broad cross-section of construction business owners across Canada. The findings provide a data-driven snapshot of how owners are preparing, or not preparing, for succession.

Key findings

Lack of succession plans: Less than one-third of owners have a formal succession plan
Upcoming transitions: Almost one-third plan to transition ownership within the next five years, primarily due to retirement
Identified successors: More than half of respondents have identified potential successors, but only one-third have mapped out the transition

These key findings illustrate the growing need for thoughtful succession planning. Many owners find themselves rushed into a sale or struggling to secure the best financial outcome for their transition.

With 30 per cent of construction business owners expecting to transition in the next five years, and 13 per cent currently transitioning, the pressure is mounting. But with only 29 per cent having a formal transition plan, this sets the stage for rushed decisions, last-minute deals, reduced business valuations, and potential closures due to lack of preparation.

Challenges

Financial planning: More than 60 per cent of respondents have not taken tax-planning steps to maximize income from business transitions
Emergency preparedness: Only 23 per cent have an emergency plan for an unplanned exit
Residential construction: Owners in residential construction are the least likely to have a succession plan

Most construction business owners, 94 per cent, track their cashflow and economic conditions at least once per month due to the importance they have on their day-to-day operations. However, only 55 per cent of owners consider their succession planning with the same frequency, despite its importance for their and their business’s long-term outlook.

Succession planning checklist

Define your timeline and objectives
Identify potential successors
Conduct a business valuation
Work with advisors to assess transition costs and opportunities
Document and communicate your plan
Develop a leadership transition strategy

Our research shows that most construction business owners understand the importance of succession planning, yet many haven’t taken the necessary steps to make sure they have a smooth transition when the time comes. And for 10 per cent of respondents, they don’t know where to start.

Whether the plan is to sell, transition to family, or explore employee ownership, a construction business’s long-term success depends on the steps taken today.

Starting early can make a significant impact on the outcome of a succession plan. Consulting with tax, legal, business, and transition advisors helps ensure the exit strategy is thoughtful and effective. With careful planning, succession doesn’t have to be overwhelming. Secure your business’s future, and yours, today.