The business side of succession: Why financial performance shapes your transition

*Article sponsored by MNP

You already know how fast the construction industry moves. You see it on the jobsite, in your bid cycle, and in the financial discipline required to stay competitive. But what if that same sense of urgency applied to your exit strategy?

According to Preparing for the Next Chapter in Construction, a nationwide report by MNP and Ipsos, nearly one-third of Canadian construction business owners expect to exit their business within the five years. Another 13 per cent are already on the process of transitioning.

Yet despite this clear timeline, most still don’t have a plan.

Too few have a formal plan in place for succession. Even fewer are ready for the unexpected. And when it comes to maximizing the value of a future sale or transfer, most haven’t taken the necessary financial steps.

That’s not just a gap in planning, but a potential liability.

Why cashflow drives a stronger transition

You’ve done more than you think. Now it’s time to turn that into a plan. Many construction owners already have the tools to build a strong transition plan. Nearly all survey respondents said they regularly track cashflow (94 per cent) and assess broader economic trends (86 per cent) to guide daily operations and long-term business decisions.

But when it comes to succession, fewer than six in 10 apply the same level of consistency.  

That disconnect matters. Succession isn’t a separate event; it’s directly tied to the financial health of your business. Cashflow, margins, and operational stability are all indicators buyers and successors use to assess whether a company is worth investing in. If those indicators point to uncertainty, the price and the possibilities shrink.

Cashflow is the financial story your business is already telling, and it’s one of the clearest indicators of where you’re headed. In particular, whether the business can function without you. But if that story reveals weak or inconsistent cash flow, it can quickly become a barrier — making it harder to attract successors, finance a buyout, or secure a fair deal. It also raises the risk of having to sell under pressure, without the leverage or timeline you hoped for.     

Successors, whether external or internal, want to see that systems are in place, relationships are maintained, and operations will continue smoothly without you at the helm. Without that confidence, the value often disappears too.

A solid cashflow history and clean financials give you more control. They help buyers feel confident, support your successor’s transition, and gives you more flexibility to shape the future on your own terms. Because what you’ve built should support more than a smooth exit. It should fund your retirement, safeguard your family’s future, and open doors for the people who helped you get here.     

External conditions don’t just shift timelines. They reshape transitions.

The report also highlights, in recent years, changing market dynamics have caused many construction business owners to rethink their exit plans. Some were prompted by the sharp economic downturn in 2020. Others are responding to persistent inflation, rising interest rates, supply chain challenges, or ongoing labour shortages.

These pressures have created more than operational strain. They’ve introduced difficult questions about timing, valuation, and long-term viability.

Yet across all these scenarios, one pattern stands out. Owners with a clear plan in place have been better equipped to respond with purpose instead of urgency. A documented strategy gives you the clarity to adjust your timeline, the leverage to negotiate from a stronger position, and the control to protect what you’ve built.

Most owners are thinking about transition. Fewer are acting.

Though many construction business owners understand the importance of succession planning, the majority still haven’t formalized a strategy. Some admit they haven’t given it serious thought. Others aren’t sure where to begin or assume they simply won’t need a plan. A smaller group expects a family member to eventually take over, even though that outcome has become less common.

According to the report’s findings, only 30 per cent of owners have a formal succession plan. About 26 per cent say they haven’t created one, and nearly one in five don’t know where to start. While 13 per cent assume a family member will eventually take over, just one in five believe that outcome is realistic.

This gap between intention and action can lead to real challenges. While many owners say they would prefer a family transition, more are now exploring employee ownership or third-party sales — options that demand greater transparency, documentation, and leadership readiness.

Without a plan in place, successors may feel unprepared and unsure about expectations. Buyers may hesitate or move on. And owners risk losing the flexibility to define the outcome on their own terms.

Aligning financial strategy with succession

Succession planning isn’t just about choosing a successor or setting a date. It’s about creating the conditions for a successful transition, and begins with how to manage the business today.

By aligning succession with your broader financial strategy, you turn planning into advantage. You can time your exit more strategically, identify ways to increase the value of your business before a sale, and make decisions that keep you in control, even when conditions shift.

This alignment helps move succession from future goal to an active business priority. It prompts better conversations with advisors, clearer targets for performance, and more realistic expectations for what a successful transition looks like. It also ensures that the business remains attractive to buyers or successors, with fewer risks and more upside.    

Most importantly, it allows you to shape your exit with intention, not urgency, and carry forward the legacy you’ve worked so hard to build.

The work you’ve done deserves a plan that protects it

You’ve built a business that delivers for your clients, your team, and your bottom line. But unless you have a plan for what comes next, everything you’ve worked for could be left to chance.

A successful transition doesn’t happen overnight. It requires clarity, structure, and a strategy that reflects both your financial goals and your long-term vision. That might mean identifying and preparing a successor, documenting your processes, or strengthening the systems that support daily operations.

The earlier you start, the more control you keep over your timing, your valuation, and your legacy.

Here are a few ways to move forward with confidence:

• Make succession part of your financial rhythm: Track it alongside cashflow and forecasting, not just when retirement feels close.
• Understand your value: A formal valuation is the first step toward improving it.
• Reduce key-person risk: Build a business that thrives independently — one where operations, relationships, and decision-making don’t rely solely on you.
• Communicate clearly: Set expectations with family, employees, or potential buyers.
• Engage with an advisor: Legal, tax, and transition specialist can help you avoid pitfalls and maximize opportunity.

The bottom line

Succession isn’t just about stepping away. It’s about what you’re building toward.

Whether you plan to transition in five years or 15, the decisions you make today will shape your options tomorrow. The more intentional you are with your planning, the more freedom you’ll have — to protect your wealth, support your people, and walk away on your terms.

Now is the time to turn good intentions into clear direction. Because the business you’ve built deserves nothing less.