Learn the legal aspects of buying an existing company: Three real-life stories from Quebec buyers

Indeed, they are all three buyers, which means that they bought an existing company. Nearly a third of Quebec SMEs are managed by buyers and Quebec is looking for others, because 37,000 companies are to be taken over by now. 2024!

In the podcast What’s the deal? of Éducaloi, we examine the situation of each of these buyers, emphasizing the legal aspects they had to manage. Supported in particular by the Fonds d’études notariales of the Chambre des notaires du Québec, this series aims to provide information and tools for buyers, when this type of content is rare. Over the episodes, Me Valerie Thibodeaunotary and legal popularizer at Éducaloi, and Me Jean-Michel Saumurenotary and advisor to the Center de transfert d’entreprise du Québec, offer advice adapted to the reality of buyers.

Between 1999 and 2014, Japan experienced a 21% reduction in its SMEs, due to a lack of buyers[1].

Proud representative of the fourth generation

In the first episode, we make a foray into the life of Étienne Lavoie, who took over the farm from his great-grandfather. On this farm where he grew up, we grow strawberries, greenhouse and field vegetables… “It’s difficult to start from scratch in agriculture. It takes a lot of assets to start [une entreprise] and if you don’t have the guarantees to make the investment, it’s almost impossible. With his sister, he therefore bought shares in the family business. But how to determine the value of these shares and what to do in case of conflict? Étienne was only 20 at the time of the takeover and is happy to have been accompanied by a notary.

Listen to this episode

Nearly half of entrepreneurs pass on their business to a third party (48%), ie someone outside the company. Transfer to family (25%) or employees (25%) each represents respectively a quarter of cases [2].

At 50, I took over a company on the verge of bankruptcy!

The second episode plunges us into the world of Sylvie Percy. Director of sales in a multinational, she left her job to buy a well-established Quebec company in the field of electricity. In two years, it doubled the turnover and the number of employees. “I invested in the operating system, the marketing, the positioning in the market and the employees by hiring people with a lot of experience. In fact, there’s nothing I haven’t changed,” she explains. For all stages of the purchase process, she called on a lawyer.

Listen to this episode

Newcomer, I succeeded in my business takeover by climbing the ladder

In the third episode, the spotlight is on Mohamed Guetat. Originally from Tunisia, he arrived in Quebec in 2006 and was hired as a programmer at Momentum Technologie. Today, he is its Chairman and CEO.

Having been identified as a credible buyer by the founders of the company, he bought shares in the company, seven years after having set foot there for the first time. “When I joined the shareholders, it was like a dream come true,” he recalls.

But what is a shareholder agreement and what must it provide? And when a company recruits internationally, what should be considered? Notary Valérie Thibodeau answers these questions.

Listen to this episode

The Notarial Studies Fund of the Chambre des notaires du Québec supports What’s the Matter?, as well as several other initiatives that promote legal education. On a day-to-day basis, notaries are the lawyers of the agreement and adopt an approach based on prevention and conciliation. With varied fields of expertise, they also provide advice in many areas, including real estate law, business law, family law and inheritance law, specialties that make them valued professionals in situations of takeover.

To know more

Éducaloi website: educaloi.qc.ca

Projects supported by the Notarial Studies Fund

The website of the Chambre des notaires du Québec

Éducaloi report on entrepreneurship

[1] CTEQ, Economic impacts of the takeover, September 2021, online:https://ctequebec.com/wp-content/uploads/2021/09/CTEQ-ECO-FINAL-Juin-2021.pdf>.

[2] Cruz, M. (2018), Succeeding in Succession: Survey Results on Small Business Succession Planning. Canadian Federation of Independent Business, November 2018, online:https://20336445.fs1.hubspotusercontent-na1.net/hubfs/20336445/research/Reussir-la-releve-rapport-planification-releve.pdf>. Also quoted in the book L’après-inc by Drapeau, Sheehan, De Celles and Blondin, published by Septembre 2020.