Are you ready to take stock of the future you’ve envisioned for yourself and your dealership? Start by asking these questions: • Do you want to continue working as much as you are today? • Are there other projects you would prefer to be working on right now? • How will potential disruptors – like EVs, automated vehicles, and digital experiences – affect your business strategy and desire to continue in the industry? • Are your plans for the future dependent upon the value of your real estate holdings? • Should you stay and expand your business, by acquiring additional franchises/locations that would provide economies of scale and contribute to your bottom line? • How would taking on private capital partners affect the future of your dealership? A transition decision is a major one. Considering opportunities and long-term plans now will help you and your business prepare for shifts in the economy later. Think about the future of your dealership While planning your next steps, be sure to offer suggestions to help guide the direction of your business after you’re gone. There are plenty of ways your company can still support your employees, your community, and – depending on how you structure your exit – even you after the transition. Make sure your family is equipped to handle a transition In an industry where privately-owned dealerships are largely comprised of family-owned and operated businesses, family transitions are common. Do you view your business as a legacy for your children and grandchildren? Would you like to see your heirs working in the company that you built? What if your children aren’t interested in running the business? What if they need more experience or don’t have the necessary skill set to be successful owners/operators? You might have many reasons to avoid planning a family succession. Maybe the planning cost is too high, or you don’t want to give up control. Maybe you’d rather not think about your own mortality. Families that successfully integrate the next generation into the business start the process early, providing support, education, and experience. If you’d rather not burden your heirs with costly litigation, unexpected taxes, and contentious relationships, or if you don’t want to leave them a failed business, plan ahead. Manufacturers are more likely to approve a family transition if comprehensive planning has taken place well in advance. Taxes are an especially important consideration for any transition plan. Tax regulations that specifically apply to family-owned businesses could reduce or eliminate certain discounts and deductions which affect transfer value, so be sure to consult your tax advisors before finalizing any transition plans. What happens when your heirs refuse to run the business When keeping your business in the family isn’t an option, consider selling it to private or public groups to secure funding for the next stage of your life. Privately-owned dealership groups are looking to add additional franchises to complement their own dealerships. They have the experience, staff, and organizational skills to take over your business with relatively little disruption. Private dealers that have strong track records often receive manufacturer approval with ease, simplifying the closing process. Family offices that aren’t currently in the automotive sector have emerged as a non-strategic investor group. Family offices evaluate investment opportunities based on long-term viability. They want to diversify their holdings and collect a solid return on their investments. They’re able to identify with a single sector business as well as the family aspects of auto retailing. Not quite ready to exit the business? Want to take equity continued on page 12 11
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