Thank you very much, Mr. Chair.
Thank you to the committee members for having me.
My name is Marc Duhamel. I have a Ph.D. in economics from the University of British Columbia. Not only am I a professor at the department of finance and economics at the Université du Québec à Trois-Rivières, or UQTR, but I am also a researcher at UQTR's Institut de recherche sur les PME, which has been recognized for the past 25 years as one of the largest research institutes on SMEs and entrepreneurship in the francophonie and the world. Since 2023, I have also been serving as the scientific director of Repreneuriat Québec's Observatoire du repreneuriat, a provincial economic development organization whose mission is to ensure the survival of Quebec businesses by promoting business succession.
To avoid any misunderstanding, I want to say that my opinions are my own. They do not represent the views of Repreneuriat Québec, the Government of Quebec, the Institut de recherche sur les PME or UQTR.
I was asked to testify regarding Canada's productivity challenges. Although I am not an expert on this issue, I am relatively familiar with it because I worked as an economist at the Competition Bureau and at Industry Canada for 15 years, including as the director of microeconomic research and market framework policy for the last four years I was there.
What brings me here today is an issue that seems to have escaped the attention of many experts and public decision-makers, even though it has been a concern for them for several years, and that is business transfers in the context of Canada's aging population.
My testimony focuses on two main points. The first has to do with the underestimated role of business transfer in Canada, commonly referred to as “repreneuriat” in Quebec, and its potential contribution to the growth of SME productivity in Canada. The second has to do with the specific support requirements for business transfers in Canada in the context of the need for business succession.
I would like to define business transfer. A business transfer is the economic transfer of a company's property titles, control and authority over the use of assets to new owners. It is often a gradual process that takes place over several months and that enables the company to continue its business activities.
In many cases, for the buyer, or the person purchasing the company from the seller or the transferor, a business transfer represents an opportunity to strategically renew an established business. In other words, it is a transformative event in the life cycle of a SME. The buyer can renew the offer of products and services, improve the business model and increase productivity through innovation and investments in new technologies.
I am here because my research using one of Statistics Canada's new experimental databases showed that 57,760 SMEs were transferred in Canada in 2022, an increase of 25.8% compared to 2015. Canada is dealing with aging entrepreneurs, a challenge that is affecting many developed economies and putting them at risk of losing their entrepreneurial legacy. For example, according to the Organisation for Economic Co-operation and Development, the OECD, Japan lost 21% of its SMEs in just 15 years. If the same thing were to happen in Canada, we would lose 285,000 active SMEs and the jobs that go along with them over the next 15 years, mainly in remote areas.
This is a very real risk in Canada. For example, according to the Institut de la statistique du Québec, the proportion of municipalities in Quebec with fewer than 1,000 inhabitants that do not have a retail building went from 14.8% in 2015 to 22.7% in 2024, even though there has not really been any change in the number of municipalities with fewer than 1,000 inhabitants.
Right now, Canada is facing a wave of transfer intentions. According to Statistics Canada, the owners of nearly 51,000 private businesses in Canada intend to sell or transfer their business in the next 12 months. According to another study conducted in 2024, in the medium term, 126,000 SME owners want to sell or transfer their business in the next 60 months. As a result, support for the development of entrepreneurial succession is needed to prevent what happened in Japan from happening here in Canada.
In order to promote business succession, Canada's economic development policies have focused primarily on supporting forces of creative destruction in business. The economic rationale behind this approach is that entrepreneurial start-ups will be able to assure the transfer of Canada's entrepreneurial legacy to a new generation of more skilled, innovative and successful entrepreneurs. However, it is clear that entrepreneurship policies and investments in developing the start-up ecosystem remain weak, with a few exceptions. Other leading researchers have also made this same observation on the ineffectiveness of entrepreneurship policies in developed countries.
However, the most important—