There’s nothing simple about creating a leadership succession plan for an automotive dealership. These plans involve the transition of an immensely valuable asset from one owner to another, and it’s essential that dealers looking to retire or divest approach the process with care, counsel, and clarity around what they want to achieve.
We’ve previously written about the seven key elements of a successful automotive succession plan. Now, we’re putting those elements into action by sharing the five steps for effective succession planning. Explore them below, and contact us to schedule time for a succession planning consultation.
1. Build a Team
No owner can plan for leadership succession alone. You need the right team to support your objectives and help you execute the plan. This process typically requires the following roles:
- Business attorney (See our recommendations for selecting the right one)
- CPA
- Banker
- Insurance agent
- Financial planner
- Relevant family members or dealer management staff
- Automotive mergers and acquisitions consultant
You may already know some of the people who will serve on your succession planning team. For roles that you need to fill, seek recommendations from others who have gone through the process. It’s always best to assemble a team that is experienced in successful leadership succession planning. In the end, your team should be able to provide sound, authoritative guidance as you navigate issues that emerge during the journey.
2. Secure a Valuation
It’s important to know exactly how much your business is worth as you start the succession planning process. While you may intend to leave the dealership to a family member, you must maintain the flexibility to sell to a third-party or to dealership management if needed.
And, even if you do leave your dealership to a family member, it’s helpful for them to understand the value of the asset they are inheriting so they can take the right steps and make the right decisions after assuming operations.
3. Review Strategies and Options
There are countless strategies and options as you look to divest your dealership. We are succession planning experts who regularly help owners find the best strategies and options to meet their objectives. The best strategy for your business will be the one that:
Protects the business from unforeseen events to come.
- Supports operational excellence for the foreseeable future.
- Maintains key partnerships and relationships, including those with factories/manufacturers.
- Minimizes tax exposure for all parties during the transition.
- Gives you peace of mind as you enter retirement or pivot to something new.
As you consider strategies and options, make sure you’re building a succession plan that’s customized to your ultimate goals. Your business is one-of-a-kind, and you need a unique plan rather than an off-the-shelf playbook.
4. Identify Future Leaders
Who will assume operations as you step away? If you have not yet identified the future leaders of your business, it’s time to consider your options.
In many cases, owners plan to pass their business to family members. If this is your plan, who will be the principal operator and decision-maker?
Owners may also choose to sell their dealerships to a group of senior staff members. This is a great way to ensure ongoing operational excellence as people who know your business the best will be taking over.
In some cases, dealers may choose to sell to other dealer groups or to publicly traded companies.
Lean on the team you built in the first step above to help you make these decisions. And, as noted in step two, maintain flexibility by keeping your options open. You never know how circumstances may change during the succession process.
5. Secure Your Legacy
You’ve likely spent decades building your business into a source of pride and tremendous value. The automotive succession planning process is your opportunity to ensure that the growth continues while also securing your legacy for the long-term.
This is just another reason why it’s so important to build the right team. When you have the right team members helping you through the succession planning process, you significantly increase the chances of successfully securing your legacy. An effective succession planning process will allow you to feel good about your exit, enjoy your retirement, and watch from afar as the next generation of leaders takes your business to new heights.
Meet the Succession Planning Experts at Dave Cantin Group
Our team specializes in creating structured plans for owners who are interested in succession planning. The roadmaps we create for clients include arrangements for the short- and long-term management of your business, as well as clear steps to protect your dealership and secure your legacy. In addition to our expertise in succession planning, the Dave Cantin Group remains vigilant in staying abreast of industry trends and market dynamics through our Market Outlook Report, ensuring our client’s plans are always aligned with the latest developments in the automotive sector.
Learn more about our dealership succession planning services.