Automotive Dealership Succession Planning, Pt 1

A Tale of Two Succession Plans

Automotive dealership succession planning is something many dealers think about, but sadly, some just do not get around to actually creating a documented plan.  In my 35+ years of brokering automotive dealerships in New England, I’ve seen succession planning (and lack thereof) play out in a number of ways. But rather than tell you all the reasons why you should create a succession plan (now!) for your dealership, by example I'll tell you two true stories from my extensive career.

A New England automotive dealership owner contacted me several times over the last few years of his career. He knew he wanted to put in place a succession plan that gifted his stock of the dealership to his son. Several times he contacted me, and I did appraisals of his dealership.

Unfortunately, that’s all he did. He passed away before taking the next step to creating a succession plan. As a result, his son, who did receive the stock, has been paying taxes on the deal for the last 10 years...10 years of taxes because of the lack of a succession plan. In this strong market, the son is considering selling the dealership, but there are still a few more years of taxes due. So selling the dealership doesn't make much sense. 

Read my next blog post to hear of a different tale of succession planning.