Automotive Dealership Succession Planning, Pt 2

A Tale of Two Succession Plans

In our last blog post I shared with you a true story about automotive dealership succession planning, which, did not turn out well. As I mentioned, I’ve seen many types of successful, and unfortunately, unsuccessful, succession planning over the course of my 35+ years as a broker for New England auto dealerships. Today, I’d like to share with you another true tale of succession planning--and this one has a much better ending!

One of our larger clients had several dealerships, and had two family members to whom he wanted to gift shares of the dealerships. He put a comprehensive plan in place several years ago. He passed away recently. Most stock had been gifted by then and two dealerships were left with minority interests.

We performed the valuations, including discounts for minority/lack of marketability. The estate planning process took care of the disposition of the rest of the stock, all very straight-forward and unimpeachable. Estate tax law allows for small interests to be transferred tax free. We were able to provide valuations that came in under that threshold. The family members were all able to inherit the rest of the stock tax free. All in all, it was an extremely successful approach to succession planning. 

These two tales are just two true stories of how auto dealers think about the future of their dealerships. Which scenario would you prefer for your family? Is it time for you to start succession planning?