Imagine a scenario where Canadian businesses choose to empower their employees as owners rather than selling out to foreign entities, particularly those from the United States. This bold move is becoming increasingly popular, and it’s reshaping the future of entrepreneurship in Canada. But here’s where it gets intriguing: What if this trend isn’t just about retaining control, but also about preserving national identity and economic resilience? Let’s dive into this fascinating shift and explore why it matters.
Aaron Schroeder, founder of Brightspot Climate, found himself at the center of this movement. Despite receiving numerous unsolicited offers from larger companies and hedge funds, particularly from the U.S., Schroeder wasn’t interested in selling. Instead, he envisioned a different future for his Vancouver-based engineering consultancy. When the time came to transition, he established a unique trust that turned all 40 of his employees into owners—without requiring them to pay anything upfront. And this is the part most people miss: This model isn’t just about sharing ownership; it’s about fostering a sense of collective responsibility and long-term commitment.
Employee ownership isn’t a new concept in Canada, but 2024 marked a significant milestone. The federal government amended the Income Tax Act to introduce the Employee Ownership Trust (EOT), a new option designed to facilitate this transition. Since then, four companies, including Brightspot, have embraced this model. This comes at a critical time, as Canada grapples with a wave of baby boomer entrepreneurs nearing retirement and the challenges of a trade war with the U.S. But here’s the controversial part: While EOTs offer numerous benefits, they also require owners to potentially accept lower sale prices and delayed payouts. Is this a sacrifice worth making for the greater good?
An EOT operates by holding a company’s shares on behalf of its employees. The trust finances the purchase, and the owner is repaid over time using the company’s profits. Employees don’t directly buy shares but participate in profit-sharing. For Schroeder, this was a way to reward his team and safeguard the company’s culture and intellectual property. “If we’d sold to a U.S. company, our identity would have been lost,” he explained. “Keeping small businesses Canadian has immense value.”
However, time is ticking. The federal government’s tax incentive for owners selling to employees expires at the end of this year. Without it, the future of EOTs in Canada hangs in the balance. Tiara Letourneau, CEO of Rewrite Capital Advisors, warns, “Companies need to act now or risk missing this opportunity.” Her firm is working with a dozen mid-sized corporations exploring this transition, highlighting the urgency of the situation.
Canada’s business landscape is on the brink of a seismic shift. According to the Business Development Bank of Canada (BDC), over 100,000 entrepreneurs aged 65 and older are expected to transition their businesses, representing over $300 billion in revenue over the next five years. In September 2025, Rewrite Capital Advisors helped Taproot Community Support Services become Canada’s largest EOT, with 750 employees across B.C., Alberta, and Ontario.
The federal government’s $10-million capital gains tax exemption has been a game-changer, making EOTs more financially appealing. Wes Novotny, a tax lawyer with Bennett Jones, notes, “It’s a significant incentive that encourages owners to explore this option more seriously.” Yet, challenges remain. Owners may need to accept lower sale prices, and employees must navigate increased financial responsibilities and management complexities.
Nikki Barrett, CEO of Grantbook, faced a similar dilemma when a co-founder wanted to sell. With 50 employees and limited financial resources, an EOT seemed like the perfect solution. On January 1, 2025, Grantbook became Canada’s first EOT. Barrett acknowledges the challenges, such as addressing employee concerns about profit distribution, but remains optimistic. “The team is aligned, and we’re all moving in the same direction,” she said.
While EOTs offer flexibility in profit distribution and ownership structure, they aren’t without drawbacks. Employees may mistakenly assume they’ll lead the company, but management still retains control. Additionally, transitioning founders may struggle with relinquishing control, and decision-making could slow down under a board of directors.
Despite these challenges, the benefits are compelling. Justine Janssen, executive director of Employee Ownership Canada, advocates for extending the tax incentive. “From an economic perspective, it’s a no-brainer to keep businesses local,” she argues. Yet, the Finance Department remains tight-lipped about the incentive’s future, stating only that the tax system is under ongoing review.
Here’s the thought-provoking question: As Canada stands at this crossroads, should the government do more to support EOTs, or is the current incentive sufficient? What role should national identity and economic resilience play in shaping business transitions? Share your thoughts in the comments—let’s spark a conversation about the future of Canadian entrepreneurship.
