TO THE EDITOR:
In the HBO series “Succession,” the lack of a clear succession plan leads to gut-wrenching debate among those left in charge. No dealer wishes that upon their family.
Dealers have enjoyed an unprecedented increase in profitability over the last 18 months that has already led a number to make decisions about succession planning. It is time for dealers to consider a little-known tax advantage option that allows a peaceful transition and the ability to cash out: selling to their own employees through an employee stock ownership plan.
Fitzgerald Auto Malls has become the largest 100 percent ESOP dealership group. Many people know Publix supermarket in the South for their great service. Publix is the largest ESOP company in the country, with over 240,000 employees.
U.S. Sen. Ben Cardin calls the use of such plans a great opportunity to create “work force security.” It takes coordination with manufacturers, bankers and experts in the field, but it allows the business to continue and the dealer to maximize profitability while saving on taxes through provisions in the IRS tax code that encourage investment in American businesses.
Employee stock ownership plans come in a variety of shapes and sizes allowing for tax savings that begin when employees become 30 percent owners of the dealership or group. Selling to a competitor isn’t the only option, and there’s a better way to preserve your legacy. I encourage dealers to explore such plans as a succession strategy.
ROB SMITH, Trustee, Fitzgerald Auto Malls, Rockville, Md.
