PLAN NOW FOR A SMOOTH BUSINESS TRANSITION LATER Learn Strategies to Avoid 7 Common Pitfalls When Preparing for Dealership Transition By Duncan Moseley Managing Director in the Center for Family Legacy at Truist, and Stacey Prince-Troutman, Partner and Chair of the Trusts and Estates Practice at Akerman LLP It can take years — or generations — to build a thriving auto retailing enterprise. The complexities can make a smooth transition to the next generation challenging, but addressing key concerns and problem-prone areas today will make the transition easier down the road. Getting started early on structuring can help ensure a more seamless transfer and the continued success of your business. NO ONE-SIZE-FITS-ALL APPROACHES A business transition ideally occurs when the right conditions align in 1) the market, 2) the business and 3) timing for the owner. In the real world, dealers must balance these elements, making tradeoffs based on what’s possible and how flexible they’re willing to be on payout and timing. A long runway allows you to better coordinate the timing and address other potentially thorny issues to ensure a smooth and rewarding exit. While every dealership is different, certain shared characteristics make transitions particularly tricky: • Multi-layer structures. Auto retail businesses often have several value drivers, such as real estate, new and used car sales, parts and service revenues, and F&I profit participation funds, among others. Many long-established businesses have real estate and business investments throughout the community. • Multi-generational and minority operating partner involvement. Dealerships often have immediate and extended family, along with operating partners with minority 19 Arkansas Auto Dealer
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