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 is not just a hypothetical situation; it’s a growing trend that’s reshaping the business landscape in Canada. But here’s where it gets intriguing: What if this shift isn’t just about retaining control, but also about fostering a deeper sense of community and economic resilience? Let’s dive into this fascinating development.
Aaron Schroeder, founder of Brightspot Climate, found himself in a unique predicament. Despite never putting his company up for sale, he was inundated with offers—sometimes weekly—from larger corporations and hedge funds, predominantly from the U.S. When the time came to consider the future of his Vancouver-based engineering consultancy, Schroeder made a bold decision. Instead of selling to the highest bidder, he established an Employee Ownership Trust (EOT), effectively turning all 40 of his employees into owners.
And this is the part most people miss: Schroeder’s move wasn’t just about financial transactions; it was a strategic effort to preserve the company’s culture, intellectual property, and Canadian identity. “If we’d sold out to a U.S. company, our culture and IP would become American,” he explained. “Keeping small businesses Canadian has immense value.”
Employee ownership isn’t a new concept in Canada, but it gained fresh momentum in 2024 when the federal government amended the Income Tax Act to introduce EOTs. Since then, four companies, including Brightspot, have embraced this model. This shift comes at a critical juncture: as baby boomer entrepreneurs approach retirement, Canada faces the challenge of maintaining economic strength amid trade tensions with the U.S.
But here’s the controversial part: While EOTs offer a pathway for employees to become owners without upfront costs, the model relies heavily on a temporary tax incentive set to expire at the end of this year. Without this incentive, 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 running out of time.”
So, how does an EOT work? Essentially, a trust holds the company’s shares on behalf of the employees. The trust finances the purchase, and the owner is repaid over time using the company’s profits. Employees don’t buy shares directly but benefit from profit-sharing. This structure not only rewards employees but also ensures the company’s continuity and local roots.
Take Grantbook, a Toronto-based company, for example. When a majority co-founder wanted to sell, CEO Nikki Barrett discovered the EOT model. “This is exactly what we were looking for,” she said. Grantbook became Canada’s first EOT in 2025, addressing employee concerns by distributing early profits to boost morale.
Here’s where opinions start to diverge: While EOTs offer numerous benefits, they’re not without challenges. Owners may need to accept a lower sale price compared to open-market offers, and employees must develop financial literacy to understand balance sheets and management responsibilities. Additionally, some entrepreneurs may struggle to relinquish control, and decision-making could slow with a board of directors in charge.
Despite these hurdles, proponents like Justine Janssen, executive director of Employee Ownership Canada, argue that EOTs are essential for Canada’s economic future. “From a purely economic perspective, it’s a no-brainer to incentivize business owners to keep their companies local,” she stated.
As the debate continues, one question remains: Will the federal government extend the tax incentive, or will this promising model lose its momentum? What do you think? Is the EOT model a viable solution for Canada’s economic future, or are there better alternatives? Share your thoughts in the comments below and let’s spark a conversation!
