It’s an unpleasant reality for an auto dealer: One day, the dealership will need to be run without them. Planning for that transition is essential to ensure that it takes place smoothly and according to their wishes while shifting wealth to future generations with minimal losses.
“A lot of dealers don’t want to think about their ultimate demise,” Charles Seguin, president of Seguin Advisory Services, told Automotive News Canada. “They’re constantly trying to increase the business, but they don’t look after the family that they’re trying to create wealth for.”
According to the 2016 Family Business Survey conducted by the U.S.-based National Bureau of Economic Research, 43 per cent of family firms do not have a succession plan in place, and only 12 per cent make it to a third generation. Add to that the particularities of the automotive business, and a long-term plan becomes critical, especially if the intent is to hand the business over to one or more children.
“Auto retailing is different,” Seguin said. “They’re franchises, so ultimately the brand is going to approve whether Johnny or Mary is going to be a dealer.
“If you’re a 50-year-old and your dad’s 72 and you’ve basically been running the store forever, then you’re probably not going to have much difficulty if you’ve done a good job. But if you’re, say, under 35 and you haven’t had that breadth of experience in running a business before and working in all the departments – because a dealership is a number of businesses under one roof – then the brand doesn’t have that same level of confidence and experience with you.”
IMPROVING THE ODDS