New investment opportunities for French and other foreign investors in Quebec

The forced hiatus in business activity and the economic shock caused by COVID-19 have hit many Quebec business owners hard. The impact is especially heavy for owners saddled with the burden of succession planning and finding no one to take over the reins. Currently, 30 to 60,000 Quebec businesses are in danger of disappearing within five years due to a lack of suitable successors.1 

Prior to the COVID-19 crisis, just under one in four owners of small and medium enterprises (SMEs) intended to transfer their businesses between 2017 and 2022. For Canada as a whole, the proportion is only one in five SMEs.2 In many cases in which owners expressed a willingness to transfer their business, they had neither a succession plan nor a suitable successor. The problem can be attributed to several factors, including a shortage of entrepreneurial successors—the direct result of an ageing population—and the retirement of many entrepreneurs. 

The new reality will have direct consequences on the Quebec economy and may hasten the premature closure of many businesses.3 According to the Canadian Federation of Independent Business (CFIB), roughly 25% of Quebec SMEs will close after a few months due to the sharp drop in revenues caused by the COVID-19 crisis.4 Therefore, it appears that the need for business transfers and transferees will be much more pressing and will only be intensified by the current crisis. 

For many business owners without a succession or transfer plan, the solution lies in a takeover or acquisition by foreign investors. The business succession challenges in Quebec can and should be seen as an opportunity for wealth creation. In this context, Quebec’s rich and diversified market for business transfers represents an opportunity for foreign investors insofar as the Quebec government supports foreign investment.


1. Overview of Quebec’s rich and diverse market for business transfers

In Quebec, business owners looking for successors come from all industry sectors, but a significant number work in the agribusiness, advanced manufacturing, pharmaceuticals and cosmetics, aeronautics, tourism and specialized services sectors. 

Both in Quebec and in Canada as a whole, majority owners of SMEs tend to favour external transfers of SMEs. In Quebec, 51% of majority owners who intend to transfer an SME prefer an external transfer, i.e. a transfer to someone who is neither a relative nor internal to the company. In Canada, 59% of majority owners prefer the external transfer method for SMEs. 

Moreover, researchers have observed that nearly one-third of Quebec SMEs originate from business transfers, while in Canada, that proportion was one-quarter in 2017.5


2. Business transfers in Quebec: an opportunity for foreign investors

The demand for SME successors is relatively higher in Quebec than in other Canadian regions. Business transfers are a growing feature of the Quebec business landscape and represent an unprecedented business opportunity for foreign investors. 

The influx of foreign capital into a business to be transferred can be a major stimulus to its growth. In fact, the combination of new capital and the foreign investor’s international network and expertise is a major asset for both the transferred company and the business ecosystem in Quebec. 

“Field observations show that transferred SMEs often adopt longer-term sustainability strategies that do not necessarily promote high growth when the successor pursues a strategic renewal process,” says Professor Louise Cadieux.6 

Foreign investors, especially Europeans, often choose Quebec as a gateway to North America. Aside from the favourable exchange rate, their choice is driven by economic, political, geographic and linguistic factors, among others. 

Quebec has a dynamic economic environment and stands out for its many tax advantages and other conditions favourable to the export of goods and services. The business income tax rate is also among the lowest in North America. 

Quebec is a party to several trade agreements and is a signatory to free trade agreements with major economic partners (CUSMA, CETA, CPTPP), thus positioning Quebec well on the world stage. Furthermore, the quality of its workforce, as well as its network of higher education and business research and development facilities, rank among the world’s best. 


3. A government that helps attract foreign investment

Attracting investment and boosting exports are current government priorities. 

  • Investissement Québec International offers programs to help companies carry out their investment projects and can provide development capital to companies looking to invest in Quebec. 
  • Montréal International and Québec International promote the economic development of the metropolis and the Capitale-Nationale region, providing on-the-ground support to foreign companies or investors setting themselves up in Quebec. 
  • Quebec’s Ministry of Economy and Innovation and the foreign representation offices of the Ministry of International Relations and La Francophonie provide information on entrepreneurship as well as on Quebec’s venture capital industry and potential investors. They also offer several training programs.7 

The Quebec Government also supports business transfers through the Centre de transfert d’entreprises du Québec (CTEQ) and the Fonds de transfert d’entreprise du Québec (Quebec Business Transfer Fund). New entrepreneurs looking to go into business will be able to benefit from financial support tailored to business transfers, including favourable financing terms.8 


4. Unique ties for business transfers between Quebec and France

Business ties are natural between Quebec and France, based on their historical connection and shared language. In fact, the economic relationship between Quebec and France is characterized by extensive foreign investment. There are over 300 subsidiaries of French companies operating in Quebec. Moreover, in recent years, France has regularly ranked between 4th and 6th largest trading partner worldwide. 

Of note, the Mouvement pour les jeunes entrepreneurs (Moovjee), founded in Paris in 2009 and the Quebec Moovjee, which followed in 2019 have become a source of inspiration to young French and Quebecois entrepreneurs wanting to start or take over a business.9 


5. The role of Langlois Lawyers in foreign acquisitions in Quebec

For many years, Langlois Lawyers have been acting for foreign—particularly French—buyers in Quebec acquisitions that typically stem from the lack of a successor within the family. This experience allows us to advise our clients on legal and regulatory matters pertaining to the structure of the acquisition, the nuances of due diligence, the labour relations environment, and the preparation and negotiation of key contracts. In a setting in which acquisitions of this nature are likely to increase significantly as a result of the COVID-19 crisis, we will continue to guide buyers on their approach to doing business in Quebec and on the business environment in general.

2 Marc Duhamel, François Bouard, Louis Cadieux, Frédéric Laurin, Portrait du repreneuriat de PME au Québec en 2017 (French only), École de gestion de l’Université du Québec à Trois-Rivières and Centre de transfert d’entreprise du Québec, 2019.

3 According to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), the impact of the current pandemic on the global economy is the worst economic fallout since the Great Depression that followed the crash of 1929 (see, in particular,
8 The Fonds de transfert d’entreprise du Québec is a limited partnership established under the laws of the Province of Quebec and whose funds are managed by Investissement Québec (see, in particular,


Up arrow Top of the page