The reasons Canadian brokerage owners sell have widened beyond the aging demographic that has long defined succession, with operational challenge now pushing more owners toward the exit, according to Michael Stack (pictured), vice-president of acquisitions at BrokerLink.
The core driver has not moved. Owners continue to age out of the business, and consolidators remain the fallback where no internal succession plan exists. What has changed is everything stacking on top of that, from a tightening labour market to industry reform to inflation running through every line of a brokerage's costs.
"If you layer on reform with a range of operational challenges and an aging demographic, it does create a conversation around potential succession and opens the door," Stack said.
Staffing is one of the key challenges. Brokerages are competing for a shrinking pool of talent while absorbing the daily disruption of covering absences and vacancies.
"A little bit of a talent war is going on. I guess this is the best way to describe that," Stack said.
Being short-staffed forces owners to pick up operational tasks themselves and manage around illness and turnover, on top of the longer-term questions about where the brokerage is heading. The workforce itself is also changing in ways that complicate how a brokerage runs. Stack said generational differences are creating human resources pressures owners did not face a decade ago, particularly around expectations of flexibility.
"There's a real desire, especially for new entrants to the workforce, to have more flexibility, be able to work from home from time to time," he said.
The pace of technological change compounds it. Owners weighing whether to keep investing face questions about becoming a digital broker and about competing with AI moving into the market.
"Certainly, it's the pace at which things are changing in the industry. That's one of those items," Stack said.
Then there is the economy. Stack said inflation has reached every corner of brokerage operations, from systems to supplies to wages, as owners try to hold on to staff feeling the same squeeze.
"Rising costs in everything brokers need within their businesses, whether it's technology or office supplies," he said.
Not all of the movement is defensive. Stack said the brokerage market remains healthy, with new owners still entering even as others look to leave.
For those who decide to sell, the timing of the decision shapes how much they walk away with. Stack said preparation should begin far earlier than most owners assume, ideally five to ten years before any sale, with the business made less dependent on its owner and more attractive to a buyer. That means building a stronger management team, cleaning up financial reporting and settling tax planning well ahead of a transaction.
Once that groundwork is in place, the sale itself needs room. "As a rule of thumb, I think you should give yourself six to eight months lead time for a targeted close," Stack said.
The picture is not uniformly one of poor planning. Stack said most owners have a sense of their own time horizon and tend to give themselves about a year to prepare, with many readying the business almost by default.
"They generally would give themselves a year or so lead time in preparing and building an exit strategy and making sure they have all of the pieces in place for a proper exit," he said.
The most common error he sees is owners leaving it too late. Stack said many assume the situation will resolve itself, or that a family member will take over when none is willing or able to finance the deal.
"A common mistake that I see is someone waiting too long and then assuming things will work themselves out," he said. "Owners often think they're going to stay longer than they actually want to."
Compressing the timeline carries a cost. Stack said an owner forced to move quickly has fewer choices and less leverage, which can erode the value of the business at the point of sale.
"When owners want to retire right away, their range of options generally gets smaller," he said.
The reverse holds as well. An owner who spends years preparing the business and its leadership presents an easier deal, Stack said, and that ease feeds directly into price.
"Obviously, if the transaction is more comfortable and it's an easier process with great transition, they're willing to probably pay more as well," he said.
