Written By: Alysha Webb
Every dealership owner will eventually leave the business — the question is whether that exit is intentional, structured, and aligned with your goals. Well before transferring ownership of your dealership, whether through an outside sale or to a family member, it’s essential to define your priorities and what you hope to achieve from the transition. The answers will help you develop a plan that creates a clear path to a successful transition.
In our recent webinar, Dealer Exit Strategies: Planning for a Profitable and Purposeful Transition, experts David Brackenbury and Rodger Biddle of Dealer Exit Planning Associates, along with Paul Dumm, our valuation expert, broke down the process of successful exit planning for auto dealers.
Whether you’re envisioning a transition to family, employees, or a third-party buyer, the panel emphasized one thing: Start early. A well-crafted plan provides clarity, protects your legacy, and ensures your dealership’s future.
The "Eternal Decade" Mindset
Everyone can name death and taxes, but the other certainty is that you will exit your business.
According to Brackenbury, when asked about their exit timeline, most dealers say, “about ten years.” Indeed, every time you ask a dealer when he or she wants to exit their business, the answer remains the same. It’s a clue that they aren’t facing the reality that they will inevitably exit their business. Exit planning isn’t just about facing mortality — it’s about controlling your legacy and your future financial stability.
Dealers find it hard to accept their own mortality but, “there are three certainties,” Brackenbury said. “Everyone can name death and taxes, but the other certainty is that you will exit your business.”
A 7-Step Exit Planning Framework
Using a decision-making model adapted from Business Enterprise Institute, Brackenbury and Biddle presented a seven-step framework that addresses family dynamics, business value, and ownership priorities and help dealers craft an exit strategy that meets their needs.
“We believe by going through this process from the very beginning to the end, we can develop what we could call a successful exit,” Brackenbury said.
The three intersecting “domains” — family, business, and ownership — must all be considered from the start. Each carries its own identity, Brackenbury explained: family is driven by emotion, business by profitability, and ownership by control.
“It’s important that we understand what these domains are saying, then we can begin to develop a plan that reflects that,” he said.
According to Biddle, the pain points often arise at the intersection of these domains — and that’s typically where key issues are overlooked. “That’s where somebody hasn’t asked the right questions,” he noted.
Determining the dealer’s objective relation to these three areas is a key part of the first step in the seven-step decision framework. This helps define the timing of the exit, establish long-term financial goals, and determine whether the transition will be to an internal or external party.
Neutral Valuation: The Anchor of the Plan
Establishing a benchmark valuation early in the process creates a neutral basis for dividing up assets.
The next step—in many ways the most crucial—is to bring in a neutral third party to determine the value of the dealership assets and project future cash flows. Establishing a benchmark valuation early in the process creates a neutral basis for dividing up assets, said Dumm, our firm leader of Business Advisory Services. This can help prevent or minimize conflicts.
“The value of the business lies in the economic benefits it provides to whoever holds the ownership interest,” said Biddle. “That’s typically represented by cash flow—but it also includes personal assets.” For many dealers, their ownership stake is their largest personal asset. Related real estate must also be considered.
That all leads into the third step in the planning process: increasing the business’s value. This includes minimizing taxable income and identifying who will take over key management responsibilities. That successor might be a key employee, a family member, or a third-party buyer.
“But in any event,” Biddle said, “if you’re going to separate yourself from the business, somebody else has to be running it.”
Third-Party vs. Insider Transition
If you remove yourself from the equation, you’re removing yourself from the business’s ongoing cash flow.
Once a valuation is in place, the focus shifts to enhancing the business’s value and preparing for leadership succession. Whether you’re positioning a family member for leadership or planning to sell to a third party, someone must be ready to take over—and the earlier that process starts, the better.
The next steps involve determining whether ownership will transition to an insider or be sold externally. If transitioning to an insider, the structure you choose can significantly impact future cash flow. That’s especially important if the current owner is relying on that income to maintain a certain standard of living.
In cases where the business is gifted to a family member or another insider, the owner may want to remain involved as a consultant or in a similar role, said Biddle. “If you remove yourself from the equation, you’re removing yourself from the business’s ongoing cash flow,” he explained. In those situations, the gifting structure may need to include an earn-out or other income arrangement tied to the sale.
Continuity Planning
Even if you’re working alongside the family member or employee who will eventually take over ownership, step six—business continuity planning—is still essential. If ownership is being gifted, it’s critical to have all legal documents in place to protect the current owner, Brackenbury said. Only then can a detailed continuity plan be created.
This continuity document is extensive—roughly 30 pages, he noted—and outlines how the transition will take place and how it will be funded. It should include a comprehensive overview of what the dealer has built and accomplished, the location of legal documents, insurance policies, key advisors, which employees are expected to stay on, and more.
The document is shared with both the dealer and their family, “so everyone knows exactly what’s going to take place as far as this transition,” Biddle said.
Estate and Wealth Planning
The final step involves strategic estate planning — including asset transfer strategies, estate tax planning, and generational wealth planning. These important services are best handled in coordination with an accounting firm experienced in dealership operations, like Rosenfield and Co. Our team understands the unique complexities that dealerships face and works closely with owners to develop tailored strategies that protect their legacy and ensure a smooth transfer of wealth across generations. Proper estate planning is essential to preserve the value of the business and provide peace of mind for both owners and their families.
Navigating the “People” Side of the Plan
If the transition was handled well, the children will still sit down together for Thanksgiving dinner.
A smooth ownership transition requires buy-in from everyone involved. Key employees—those critical to maintaining operations and cash flow—must be incentivized to remain after the owner steps away. Retaining this talent is essential to the continued profitability of the dealership.
Equally important is developing a successor. “It’s not something you can do overnight; it’s a plan,” Biddle said. Identifying and preparing the next leader early on helps ensure the dealership’s long-term success. This becomes especially complex when family is involved. Choosing a successor within the family is often “the most emotional and critical” part of the process, Biddle noted. Dealers must consider which child or children will be involved in the business, who has the necessary skills to run it effectively, and whether the chosen successor will have the financial resources to buy the dealership when the time comes.
Biddle also emphasized the importance of staying flexible: a successor who seems like the right choice today may not be the best option five years down the line. “So, the earlier one can start to have that conversation, the better,” he said.
The weight of succession isn’t just operational—it’s deeply personal. As Brackenbury pointed out, the successor may be responsible for their parents’ financial well-being after retirement. “That responsibility is going to continue growing,” Biddle added.
The concept of fairness can also complicate succession planning. One client, for example, wanted to divide dealership assets equally among their children, but only some were actively involved in the business. That created conflict. A well-thought-out plan should clearly outline how assets will be distributed to avoid misunderstandings and preserve relationships.
Ultimately, Brackenbury said, the goal is to ensure, “you are protected and the person you walk through life with is totally protected. If we can’t do that, we can’t move forward” with a sale.
He also shared a personal benchmark for success, which he calls the Thanksgiving Dinner goal: long after the dealer is gone, if the transition was handled well, the children will still sit down together for Thanksgiving dinner. “That, to me, really makes a successful plan,” Brackenbury said. “Family, protection, Thanksgiving Dinner.”
Exit Planning Assessment: Your First Step
The first step Brackenbury and Biddle take when beginning an exit planning discussion with a dealer is to have them complete an Exit Planning Assessment. The assessment covers 16 key areas for the dealer to evaluate, such as Business Value at Transfer, Family Considerations, Income Needs, and more. Each area is ranked by the dealer based on its importance—from Critical to Somewhat Important
Once completed, the dealer receives a detailed report and visual graphic that reflect their rankings. “It helps you clarify the things you’re concerned about,” Brackenbury explained. According to Biddle, the tool is only effective if dealers are honest with themselves. To monitor shifting priorities over time, they recommend revisiting the assessment at least once a year.
The resulting report helps dealers gain clarity, Brackenbury added: “It lets them say, ‘Yes, I’m comfortable with what I’ve done so far,’ or realize, ‘I thought I was okay in this area, but the results show I probably need to give it more attention.’ It’s an evolving tool designed to support informed decision-making throughout the exit planning process.”
Exit planning isn’t just for those nearing retirement. It’s for any dealer who wants to take control of their future, protect their legacy, and ensure long-term business success. Whether you’re just starting to think about your future or already preparing for a transition, having a plan — and the right advisors — is essential.
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