The Time is Now

You Took the Risk - You Deserve the Reward

You’ve done the hard work: you saw an opportunity, perhaps left a stable job, committed your personal capital, maybe guaranteed loans, worked long hours and navigated uncertainty so that your business could succeed. That’s risk. You did it not just for you, but for your team, your family and the community around you. Small- and mid-sized businesses are the engine of our economy: they provide jobs, spur innovation, and sustain local communities.

What you deserve in return is the reward for that risk. But increasingly, many owners feel that the reward side of the equation has become harder to access. Whether it is tax policies tightening, global economic volatility, or the rising cost of doing business, these forces make it tougher to convert effort into lasting value. That is why now is the time to shift from just building to preparing strategically. Because when you plan well, you both maximise reward and protect what you have built.

Why Now? The Rules Have Changed

Let us walk through how the tax and economic landscape have shifted, and why you should care now more than ever.

Expanded TOSI rules (Income-splitting)

From January 1, 2018, the expanded Tax on Split Income (TOSI) rules began applying to many payments to adult family members in a related business. In effect, amounts that previously escaped top-marginal tax rates by being paid to a spouse or adult child can now be taxed as “split income” and hit at highest personal rates unless very strict “excluded business” or “excluded shares” tests are met. This means that sharing the business reward among your family (in the structure of compensation or dividends) has become far more complex, and the after-tax cost of keeping family involved has gone up.

Passive-investment “grind” to the Small Business Deduction (SBD)

The SBD allows a Canadian-controlled private corporation (CCPC) to benefit from a lower tax rate on its first ~$500,000 of active business income. But from tax years beginning after 2018, a corporation’s access to the business limit is reduced if its adjusted aggregate investment income (AAII), for example, passive income like interest, rent, dividends, capital gains, exceeds $50,000. For every $1 of passive income above $50,000, the business limit is reduced by $5. Once passive income hits ~$150,000, the SBD is eliminated for that year. What that means in plain language: If you’re retaining earnings and investing them in passive assets (for example, to build cash for a downturn, to fund the next project, or for your retirement), that may cost you access to favourable tax rate on your active business income. That makes the reward for branching out or holding capital more complex.

Capital-gains volatility & the new CEI

In Budget 2024 the federal government proposed raising the inclusion rate for capital gains from 50% to 66⅔%. That change would have significantly reduced what you keep when you eventually sell your business. After strong push-back, that change was cancelled in March 2025; but the episode itself created uncertainty and underscored that tax rules may shift quickly.

Simultaneously, Ottawa introduced the Canadian Entrepreneurs’ Incentive (CEI) to soften the blow for qualifying founders: a reduced inclusion rate of 33⅓% on up to a $2 million lifetime gain (phased in via $400,000 per year starting 2025, fully in by 2029). Also, the Lifetime Capital Gains Exemption (LCGE) was increased to $1.25 million effective June 25, 2024. Together these changes offer powerful planning tools, but only if you anticipate them and structure accordingly.

Economic and geopolitical headwinds

Beyond tax rules, the broader environment is less forgiving than before: interest-rates have gone up; inflation remains elevated; global supply-chain disruption lingers; and the U.S., Canada’s largest trading partner, is showing increasing leverage and pressure over trade and economic policy. That means Canadian business owners face greater uncertainty and need greater resilience built into their businesses.

Taken together, the changed tax rules + macro complexity = one clear message: now is not the time to hope things stay the same. It is time to plan, prepare and protect.

What is at Stake if You Don’t Prepare

When you don’t build a plan, you expose yourself and your business to avoidable risks, and when things go sideways, you may not get the upside you hoped for.

Growth stalls

Without structural readiness, you may hit a ceiling. Maybe you’re the founder and the business depends too heavily on you. You may face operational bottlenecks, a narrow customer base, limited management depth. That restricts value creation and growth. When that happens, the multiple a buyer will assign can shrink.

Exit under pressure or undesired!

Many owners wait until exhaustion or crisis, or simply market timing forces them to sell. But at that point the business may lack proper governance, the owner may carry too much risk, and tax forces or structural problems may erode value. An exit at that moment may lead to selling for less than the business could have commanded, or worse, closure.

Community, jobs and legacy suffer.

Your business is part of a larger ecosystem: clients, employees, suppliers, local economy. When an exit happens without planning, the ripple effects matter: job losses, local supply chain disruption, loss of tax base. According to the Canadian Federation of Independent Business (CFIB), around 76% of owners expect to exit in the next decade, over $2 trillion in assets are in play. If exits happen at sub-optimal value, the national impact is meaningful.

Tax strategy missed

Because tax rules are now more complex, and changing, the failure to act early can mean you pay more when you sell, you pay more year-to-year, and you miss a crucial window to structure wisely.

In short: the risk you absorbed when you built the business is exposed, and the reward you expected may be diminished if you don’t act now.

What We Can Do About It: Build a Framework That Protects and Strengthens

We believe owners should approach their business journey in a structured, strategic way. Here’s how it works when you commit to a framework focused on value, alignment and legacy

1. Clarity of Vision & Exit Goal

Start with the end in mind. What do you want? Is your goal to:

• transition the business to a child or next-gen?

• sell to a third-party and retire?

• stay on as board-chair while a manager runs things?

  
  

  Once you define your vision, each strategic decision, on structure, reinvestment, leadership, operations, can align with that vision instead of being reactive.

2. Tax & Structural Alignment

Tax planning isn’t an after-thought, it is core to value creation. The right corporate structure, share-class design, dividend policy, ownership percentages, family-involvement documentation, and passive-income strategies all matter.

For example:

• If you expect to draw on the LCGE ($1.25 M) and CEI ($2 M lifetime) when you sell, you need to make sure your shares qualify (e.g., “qualified small-business corporation shares”) and that you meet active-business tests.

• If your company holds passive investments, you need to track AAII and understand how close you are to the $50k/$150k thresholds that claw back the SBD. By planning ahead, you align your structure with your vision, rather than letting tax forces erode the reward.

3. Operational Readiness & Process Maturity

Value is not just tax-sheltered, it is operational. Buyers and successors want companies where the business can thrive without the founder in full-time control. That means you will require documented processes, leadership team in place, customer concentration reduced, financial reporting up to standard, growth drivers identified. When operations are robust, you increase your multiple (the “x times earnings” a buyer is willing to pay) and your business can weather downturns. Planning for this takes time, so the earlier you start, the better.

4. Succession or Sale Readiness

Whether your plan is to hand the business to family, management, an employee-ownership trust, or an external buyer, readiness is multi-dimensional:

• How will value be calculated?

• What timing makes sense (tax environment, buyer interest, business cycle)?

• What role will you have post-exit (if any)?

• Do you have a backup plan (life, disability, market shock)?

• A defined exit strategy reduces uncertainty, for you, your stakeholders, and your community.

5. Community & Legacy Mindset

When you plan with the bigger picture in mind, you strengthen your legacy. That means keeping jobs in your region, preserving relationships with clients and suppliers, ensuring the business you built is a continued contributor to the local economy, not just an asset you extract and leave behind. That kind of legacy resonates, not just financially, but socially. And communities remember the owners who planned properly.

Why MExit?

Because this is what we do, and we do it for Canadian founders who want more than just “sell someday”.

At MExit, we help owners build businesses that are exit-ready, tax-efficient, and legacy-strong. Our approach is not about shortcuts; it’s about building a path, step by step, with the clarity and structures that deal with changing tax rules, economic uncertainty, and succession complexity.

We guide you through a proven eight-sprint, 24-month roadmap: from visioning, to scorecards, to process improvement, to value acceleration, to exit-readiness. Along the way you are building a stronger business, mitigating risk, and preserving reward. and preparing for the moment you choose to step away on your terms.

Our mission is simple: help you protect your life’s work, turn it into lasting wealth, and ensure your business continues to serve your community.

Build Your Future Before It Builds You

Here is the question: are you ready to lead your legacy, or will you inherit whatever the future throws at you?

You do not have to sell tomorrow, but you do need to be ready. Because factory rates, tax rules, buyer dynamics and global events can all move quickly. A business that is not prepared is a business that gives up leverage.

Book a no-obligation 30-minute Future Owner Consultation with the MExit team. In that session we will work together to:

• map where you stand today, structurally, financially, operationally.

• identify the key obstacles that could reduce your value or limit your flexibility.

• pick the handful of actions you should take in the next 90 days to improve your position.

• design the longer‐term roadmap that puts your wealth, business and legacy on the right track.

You took the risk. You built something extraordinary. Now it’s time to ensure you, your family and your community reap the full reward.

The Time is Now.pdf

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