How to plan for smooth dealership succession

This article originally appeared in the March edition of Boating Industry and was written by Financial Advisors Anthony Nasca and Brad Stanek.

For many boat dealership owners, the business is more than just a source of income, it’s a legacy. And passing the business on to your children is a milestone that must be carefully planned. However, it can be easy for dealers to kick the can down the road, dealing with the challenges of the day versus planning proactively.

With that said, it can be sobering to hear that, according to the Exit Planning Institute, only 60 percent of businesses that are passed down to family are able to survive with the next generation. How do you flip those odds in your favor?

Start by planning ahead

Many dealership owners underestimate the complexity of transferring ownership to family members. Without proper planning and open communication, several risks emerge such as family conflicts, financial strains, operational disruptions and more.

These risks can lead to missed opportunities and, without a structured plan, your children may not be fully prepared to take over, leading to inefficiencies or lost business value. By taking proactive steps, you can ensure that your dealership remains strong for years to come.

Step 1: Identify the right successor

Not every child is ready or interested in taking over the dealership. Open and honest conversations are crucial to understanding their goals, strengths and commitment. If multiple children are involved, consider how roles will be divided. Will one take charge? Will siblings co-manage, and if so, how will decisions be made? These questions should be addressed early to avoid tension later. We found it often makes sense to have each family member involved share their goals, values and needs individually and anonymously – then bring the family together as a group to create one shared vision.

Step 2: Develop a transition timeline

Once the shared vision is created, a well-structured succession plan should span several years. Gradual transitions allow your successor to gain experience under your guidance. A typical timeline may be:

• 3-5 Years Out: Identify successors, create a leadership development plan, and introduce them to key financial and operational aspects of the business.
• 2-3 Years Out: Begin transferring decision-making responsibilities, involving them in major strategic discussions.
• 1 Year Out: Implement formal ownership transition steps, such as stock transfers, legal agreements, and tax-efficient wealth strategies.
• Final Handover: Fully step back, ensuring your successor has the confidence and ability to lead.

Step 3: Structure the ownership transfer

There are several ways to transfer ownership, each with different financial and tax implications:

• Gifting Shares Over Time: Reduces estate tax exposure while gradually transitioning control.
• Selling to Family at a Discounted Rate: Allows for owner financing or gradual payments.
• Using a Buy-Sell Agreement: Sets clear terms for the transition and protects both generations.
• Creating a Family Trust: Ensures long-term financial security while maintaining business oversight.

Each method has pros and cons, so it’s critical to have a team, including your financial planner, accountant and attorney, working together to build out a customized approach for your family’s needs.

Step 4: Prepare the business financially

A smooth transition isn’t just about legal documents. It’s also about financial readiness. Conduct a business valuation to determine the dealership’s value. You may also need to restructure the company’s finances to improve cash flow and minimize tax liabilities during the transfer.

Additionally, consider your personal financial security. If you plan to rely on the dealership for retirement income, you’ll need a well-structured compensation or buyout plan.

Step 5: Communicate with key stakeholders

Beyond your family, your dealership has employees, plus relationships with manufacturers, lenders and customers who rely on strong leadership. A well-communicated transition plan reassures them the business will remain stable. Gradually introduce your successor to these stakeholders, positioning them as the future of the company.

Conclusion: The time to start is now

Succession planning is a long-term strategy that protects both your family’s legacy and your business’s future. By planning ahead, you can avoid costly mistakes, reduce stress, and ensure that your boat dealership thrives under the next generation’s leadership.

Ultimately, dealers must prioritize exit planning to protect their legacy, secure their financial future, and ensure the continued success of their dealership and their personal financial well-being. With the right approach, dealers can navigate the uncertainties of exit planning and achieve a favorable outcome that aligns with their personal and financial goals. To help build out this plan, our team offers a complimentary service, the Second Opinion Service, a 360-degree review of your dealership and personal financial situation.

Anthony Nasca, CEPA (anthony.nasca@ms.com), is a certified exit planning advisor and financial advisor with the Stanek-Haack Group at Morgan Stanley in Chicago, and Brad Stanek (brad.stanek@ms.com), is an executive director and financial advisor with The Stanek-Haack Group at Morgan Stanley in Chicago.

Source: https://boatingindustry.com/news/2025/03/24/how-to-plan-for-smooth-dealership-succession/