Employee Stock Ownership Plans and Car Dealers - A Good Match
Building on a couple of recent articles this one talks about another aspect of succession planning. We strongly believe that for many dealers the discussion of Employee Stock Ownership should definitely be made a part of any exit strategy. Why? There are plenty of advantages. From having more control over what the future of the dealership (s) looks like vs. selling to a third party to giving owners some of that value they have created in the dealership while also giving the employees a great reason to be more engaged and want to stay on to keeping a consistent experience for the customer thus ensuring the business continues to thrive to multiple tax advantages. In our opinion, it is a win-win for many dealerships and their employees.
But often when we suggest this option there is much push back. There are concerns about who will control the business and how it will be controlled. There are concerns from other vendors who make their money during the exit process that there won't be enough money to go around. There are concerns that the value of the business will somehow suffer. These are all myths not reality.
And ESOPs can take many shapes & forms. It can be partial - where the owner's family keeps a portion of the stock while selling the remainder to the employees or it can be a true exit strategy. It is somewhat flexible and is something we run into far too infrequently.
Intrigued? Here are some resources and articles to give you more information:
- What are the advantages of an ESOP over other succession planning strategies?
- Keeping It In The Family
- ESOPs Give Employees Dealership Stake
- ESOP Pros and Cons
If you have any questions on an ESOP exit strategy or any other succession planning questions, reach out. GW Marketing Services has over 35 years of car dealership brokerage experience with over 400 successful deals done. Your first call to us is always on us!
