While Google can tell you what employee ownership is, it rarely helps you decide whether considering employee ownership makes sense for your business.

At Firefly Insights, we support owners through these early stages every day. Whether you are exploring employee ownership to support growth, retain key talent, strengthen culture, or plan a future transition, clarity at the outset matters.

Here is a clear, practical roadmap to help you get oriented.

1. Start With Intent — Before Structure

Before you begin comparing tax rules or legal models, step back and ask:

• Why am I considering employee ownership?
• What outcomes matter most — for me, my family, my employees, and the company?
• How important is continuity, local ownership, or community roots?
• What role do I want after the transition?

The clarity you gain here anchors everything that follows — including which ownership model fits and how governance should work.

2. Understand the Two Main Employee Ownership Pathways in Canada

Canada has two primary models:

Employee Share Ownership Plans (ESOPs)

Employees become shareholders through direct share purchases, payroll deductions, bonuses, or a company-financed structure. This can often take the form of a Management Buyout, and is highly customizable. Owners can choose to sell as little or as much of the company as they would like.

We see this model work best for:

• Growing companies
• Leadership retention
• Long-term shared wealth building
• Companies comfortable with employees holding shares directly

You can learn more about ESOPs here.

Employee Ownership Trusts (EOTs)

A trust — not the employees directly — holds the shares on behalf of the workforce. The business becomes broadly employee-owned over time. Canada introduced its EOT legislation in 2024 and along with it came the opportunity for selling owners to access an exemption of up to $10m in Lifetime Capital Gains (until the end of 2026).

We see this model work best for:

• Succession planning, or owners looking to sell a majority of their company
• Owners wanting a clean exit pathway
• Companies with large or diverse workforces
• Keeping businesses locally owned and independent

You can learn more about EOTs here.

At this stage, your task is not to choose — it is to understand what is possible.

3. Get a High-Level Valuation Early

You don’t need a full, formal valuation right away, but you do need a reality check on the business’s value.

A high-level valuation gives you:

• A sense of what’s financially possible
• Insight into how much debt the company can support
• A starting point for future discussions with employees, lenders, and advisors

This insight gives you a clearer starting point for conversations with employees, lenders, and advisors.

4. Assess Your Leadership Team’s Readiness

EEmployee ownership is not just a transaction — it is a shift in governance and culture. Consider:

• Do we have a capable, stable leadership team?
• Are there successors for key roles?
• How ready is the team to lead without me?
• What support or development might they need?

This is not about perfection — it is about preparing the people who will carry the company forward.

5. Consider the Company Culture

For companies considering employee ownership, cultural readiness is often as critical as financial readiness. When assessing culture, we look for traits that support ownership behaviours, such as:

• Transparency
• Collaboration
• Trust
• Accountability
• Willingness to share information with employees

If these traits are already present, you’re ahead of the curve. If not, they can be intentionally built over time.

6. Learn the Tax Landscape (in plain language)

Firefly Insights regularly walks owners through the high-level tax implications of:

• Share freezes
• Vendor take-back loans
• Capital gains exemptions
• The new EOT $10M exemption (available through 2026)
• Use of HoldCos for planning
• CRA rules around controlling interest and rollover strategies

You don’t need to solve all of this alone — but you do need to know which questions to ask.

7. Build Your Advisory Team Early

At a minimum, you’ll need:

• A lawyer familiar with employee ownership
• A tax advisor
• An employee ownership consultant (that’s us!)
• A lender or financing partner, if external capital is needed

Because employee ownership is still emerging in Canada, working with advisors who understand the nuance matters — it avoids costly mistakes and unnecessary complexity.

8. Communication Matters More Than You Think

Your employees will have the same questions every team asks:

• “What does this mean for my job?”
• “Will I need to invest money?”
• “Does this change how we work?”
• “Is the business being sold?”
• “How does this benefit me?”

A thoughtful communication plan builds trust, reduces fear, and sets the foundation for a healthy ownership culture.

9. Start Small: A Feasibility Assessment

For most businesses considering employee ownership, a feasibility assessment is the simplest way to understand what a transition could look like before committing. This assessment looks at:

• Owner goals
• Employee ownership models
• Tax and legal options
• High-level valuation
• Financing pathways
• Cultural readiness
• Implementation considerations

It is a low-risk way to gain clarity before committing to a transition.

Final Thoughts: Employee Ownership Starts With a Conversation, Not a Commitment

Most owners do not begin this journey knowing which model they want. What matters is awareness, timing, and alignment with your goals.

We work alongside Canadian owners to clarify intent, evaluate feasibility, and outline possible pathways.

If you are considering employee ownership, the best starting point is a conversation.