Automotive News Canada - June 2023 - 23

Schaufele: Succession plans should be continually revisited. Size and profitability
of the dealership, goals and intentions of the owners, and family dynamics
can all change, along with a myriad of factors that will continue to evolve after
the plan is initiated. The most important part is beginning the process, but it is a
fluid document that will evolve over time.
Q: Automakers each have their own
distinct corporate culture. How much
of a factor does the OEM play in succession
planning?
Ahmad: If a dealer plans to transfer ownership
to the next generation, he or she
must consider whether these individuals
will be approved by the OEM-who will
need to be informed and subsequently,
choose to approve or disapprove the candidate.
Unfortunately, securing this consent
is not always guaranteed, adding an
additional factor to succession planning
for dealers.
"
Emotional and relationship
considerations are as important
to a successful succession plan
as financial considerations.
In many cases, the dealership
"
Schaufele: Different OEMs will have different
requirements regarding placement
of a new dealer principal, and overall
ownership requirements will be different for each OEM. Each manufacturer will
require various levels of input to determine what the succession plan might look
like. Typically, the OEM has final say over who the store or group may or may
not be passed on or sold to and what the new franchise agreement might look
like. It is also important to note and be aware of the specific requirements of your
OEM early in the succession planning process. You do not want to be caught by
surprise when the OEM does not approve your succession or your sale.
Q: On average, for a single-point dealership or a small group, how much
time will a succession plan take to develop and finalize from start to
finish?
Ahmad: The timeline can vary depending on the complexity of the organization,
the number of business owners and the readiness of potential successors.
While there is no fixed schedule, it typically takes several months to a few
years to complete. As mentioned before, succession planning is an ongoing
process rather than a one-time event.
Schaufele: A succession plan is an evergreen document that should be continually
evolving and updated as facts and situations evolve. However, working with
a succession adviser to develop an effective plan will consider the input of many
parties, including the current owner, spouse, children and other family members,
carries the family name, and they
want their legacy to carry
into their retirement.
-Chris Schaufele, MNP
key employees and potentially other key stakeholders. From there, the plan can
be developed by your succession advisers and include input from your accountants
and lawyers. This process can take a significant amount of time to get right
and should not be rushed. Allow several months to years to see this process
through from start to finish.
Q: What are some of the changes
you're seeing with succession planning
in 2023 compared to five to 10
years ago?
Ahmad: Manufacturer dealer agreements
have changed a lot in some cases. The
economy has also recently had an impact
on values that can affect the dealer's walkaway
number drastically.
Schaufele: Ever since the onset of the
pandemic, many business owners, including
dealers, have been more actively
considering what their future and their
retirement plans might look like. Where
succession planning and retirement for
many was previously a distant future
thought, it is now much more front-ofmind
for some dealers. However, many still have not taken steps to formalize or
even initiate this planning.
Q: For dealers who do not yet have a succession plan, what would you
recommend as the first step?
Ahmad: Succession planning is a process every dealer needs to think about
and is undeniably important. Exit planning starts with a vision for the future.
Thinking ahead about the next phase of their life will allow them to implement
positive changes and make important decisions. We suggest that dealers
create a wish list of how they envision the succession of their business. From
there, they need to start involving their professional advisers, such as legal and
accounting teams, to focus on tax implications, family dynamics, key employees
and their effect on the manufacturers.
Schaufele: Talk to your trusted adviser and engage a succession planning specialist
as soon as possible to get the conversation started and the process
moving forward. If you do not have a plan in place, it is never too late to start
one, but do not delay.
ABOUT THE PANELISTS
FARID AHMAD
Founder and Chief Executive Officer, DSMA
With over 35 years of global auto industry experience, Farid is considered a
genuine industry expert by dealers and OEMs alike, with his finger on the pulse
of the automotive marketplace across North America. Farid is founder and CEO
of DSMA, an automotive intelligence and M&A advisory service with more
than 1,000 years of combined industry experience and over 1,500 valuations
and over 400 transactions completed. For the second consecutive year, DSMA
has placed on the 2022 Report on Business ranking of Canada's Top Growing
Companies. www.dsma.com
CHRIS SCHAUFELE CPA, CA
National Leader, Dealerships, MNP
Chris is MNP's national dealership service leader and a business adviser with the
firm's assurance and accounting group in Surrey, BC. With more than 15 years
of experience in the automotive industry, Chris oversees a team of professionals
and MNP's delivery of dealership services across Canada. He helps dealers and
leasing companies as well as business owners in other industries, ensuring they
have the information to make strong business decisions. He delivers services
including reviews and compilations, helps with tax planning and compliance and
advises on a range of business issues. His expertise in accounting and assurance
standards and keen understanding of the industry allow him to identify opportunities
to help his clients succeed. www.mnp.ca/transition-your-dealership
http://www.dsma.com http://www.mnp.ca/transition-your-dealership
Automotive News Canada - June 2023

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