Business Succession

Dealership succession tends to be highly challenging because it incorporates numerous elements including:

  • Personal and Professional Development of Potential Successors
  • Valuation of Dealership
  • Factory Approval

      • Stock Transfer:
    • Gift
    • Installment
    • No current transfer

    Stock Restrictions on A or B above

    Types of Buy-Sell Agreements

    Pre-Nuptial Agreement

      Funding of Ultimate Transfer
    • Installment
    • Insure
    • Outright purchase
    • Will
      Impact on estate planning
    • A non-active children
    • Estate costs and taxes
      Beyond these more technical elements is the softer side of dealership succession including:
    • What process was used to determine whom the successor will be?
    • Has your succession plan been communicated to all members of your family and do the children not involved in the business understand how this will impact them?
    • For those children in the business, do they have a written agreement on job positions, responsibilities, accountabilities and compensation?
    • Does your spouse understand the implications that the planning process has on her?
    • What are the sources of your wife’s (survivor’s) income and what are those sources dependent upon?
    • What are the sources of your retirement income and are they independent of your successor’s ability to run the dealership?
    • Who will have control of the dealership real estate into the next generation?
    • Is there a written criterion for the next generation entry into the dealership?
    • Is there a regularly scheduled family meeting to deal with the emotional side of the succession process?
    • Does your successor have a formal business plan that supports the transition to the next generation of ownership and management?
    • Does your successor have a proven track record of managing large and complex business projects that have dramatic impact on the dealership?
    • Can the business survive without your active participation?

    Due to the growing challenges associated with dealership succession, in 2006 DPS partnered with Compass Technology Management, Inc. (CTM) in the establishment of Teleos Partners, LLC. (teleospartners.com). As founding partners of Teleos Partners, DPS and CTM each contributed its highly successful processes and methodologies to the establishment of Teleos’ business succession planning and implementation offering (teleospartners.com). Today, Teleos Partners, LLC. Is the business succession planning and implementation arm of DPS. The TELEOS Process™ for business succession planning and implementation can be summarized as follows:

    Step 1: Readiness Investigation and Assessment

    A structured “peel-the-onion” approach that collects family, business, personal financial and owner “information” for the purpose of: (1) identifying core business succession objectives; (2) specifying personal boundary conditions of all involved; and (3) determining current business succession gaps and barriers. Along the way, participants often refine skills that will be valuable in supporting detailed succession planning and implementation.

    Step 2: Integrated Business, Family, Financial and Owner Succession Plan Development

    Taking the primary outputs from Step 1, the second step focuses on the development of an integrated succession plan that addresses current business succession gaps and barriers while remaining compliant with the objectives and boundary conditions of all involved.

    Step 3: Implementation Preparation

    Ideally, this is the point in the process at which the “mechanics” of business succession are addressed. In addition, as a result of Step 2, there may be other prerequisite tasks that should be completed prior to actual implementation of the business succession plan.

    Step 4: Implementation

    Core to this process step is oversight, accountability, coaching, adjustment, and refinement. No plan will be perfect from the beginning. Unexpected developments will occur. Therefore, Step 4 has been designed to effectively monitor and track implementation progress and facilitate necessary refinements and adjustments.