Preparing to Hand Over the Keys - Succession Planning for Automotive Dealers
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Transcript of Preparing to Hand Over the Keys - Succession Planning for Automotive Dealers
Welcome to Today’s Webinar“Preparing to Hand over the Keys:
Succession Planning for Automotive Dealers”
Questions
• Attendees are in listen-only mode• This webinar is being recorded for future on-demand playback• Your participation represents acknowledgement that we are
recording• Tweet questions & comments to: #WelchAuto
Windows Mac Tablet
Ground Rules
Presenters
Jim McConnery, CPA, CA, TEPPartner - Welch [email protected] @welchllp
Susan St-Amand, CFP, CLU, CH.F.C., TEP, FEAFounder & President - Sirius Financial [email protected]://www.sirfin.com
What we will cover today
• Process to successfully transition from one generation to the next
• The sweet spot where family, ownership and business merge
• Planning to avoid or minimize family conflict
• Why tax planning matters
The Sweet Spot
Family Business
Owner
Source: Adapted from R. Tagiuri and John A. Davis (1982) Bivalent Attributes of the Family Firm, reprinted (1996)
Sweet Spot
Vision & Values
Vision: Example: To maintain family values, while continuing to increase the family wealth and live a balanced, healthy lifestyle
Are they Aligned?
Strategy Strategy Strategy
Who are the stakeholders? What are the desired outcomes for each?
Business Ownership Family
Structure & Process
Business OwnersFamily Paradox
Successful Transition:
BusinessFounders are entrepreneurs and it is important for the business to continue to have individuals who can think & act like entrepreneurs
Owners Need to think like investors while acting like entrepreneurs
These two motivations are sometimes contrary and you begin to enter the world of:
The Family Paradox
Harvest vs. Growth Income vs. Reinvestment?
Entitlement vs. Earned PositionEntitlement to work in the business or earned position by merit?
Maximize Tax Results vs.
Maximize Family
Ownership
Try to generate the best tax results or maintain family bloodline ownership?
• What are the rules that have been set, and who developed them?• One step at a time-important to prioritize and keep the process moving forward
• Evaluate the current ownership structure:
• Beneficial to complete a valuation
• Review current will, power of attorney &
shareholders’ agreement
Status Quo
• Normally beneficial to freeze the value of the interest held by the principal
• Based on freeze, the tax liability for principal can be quantified and funding options can be addressed
• Opportunity to reduce tax liability over time via redemption of shares
Freeze Opportunity
• Hold real estate separate from operating company
• Business transition does not need to include real estate
• Real estate can provide long-term retirement funding for principal
• Non-active family members can have an interest in real estate, without an interest in operating company
Planning for Real Estate
Q & A
Jim McConnery, CPA, CA, TEPPartner - Welch [email protected] @welchllp
Susan St-Amand, CFP, CLU, CH.F.C., TEP, FEAFounder & President - Sirius Financial [email protected]://www.sirfin.com