Automotive News Canada - May 2018 - v2 - 5

5

* MAY 2018

Four dealers, four situations
RICK O'NEILL

GARRETT SCOTT

MAXIME VINCENT

HAL SOMERS

Rick O'Neill says integrating the
third generation into the business
was difficult. P H O T O : R I C K O ' N E I L L

Garrett Scott's transition to full
ownership is happening gradually.

Hal Somers is working to have his
two sons designated as co-dealers
for Towne Auto Group.

Bruised feelings after a
rift: 'I would be shocked
if it ever repaired itself'

Meticulously planning
a deal: 'How we
structured ours was
more like a buyout'

Emotions can add stress to the
process of determining family members' roles, according
to Maxime Vincent of Groupe
Vincent. P H O T O : M A X I M E V I N C E N T

O'NEILL GROUP OF COMPANIES

NEWFOUNDLAND'S O'NEILL
Group of Companies consists of
seven dealerships: three Nissan, one
Infiniti, one Jaguar Land Rover, one
Volvo and one used-car storefront.
Rick O'Neill started the company
with his father and brother about 40
years ago. When his father died 20
years ago, the business transitioned
seamlessly to the second generation,
with Rick taking on the dealer-principal role and the majority of shares
while his brother acquired the rest.
Once it was time to integrate a
third generation, though, the situation became complicated.
"We ended up with a very different philosophy of how our children
should come into the business,"
O'Neill said. "My theory was that
they shouldn't be allowed into the
business unless they've been educated. They needed to go through
university. My brother's [philosophy] was always that they're here,
they've worked it out."
His brother put his daughter into
a position at one of the dealerships,
and a situation developed where
O'Neill felt obligated to exercise
his majority shareholder status to
remove her. This created a protracted legal battle and a family rift that
still exists.
"That will never go back to what
it was," he said. "They say you
should never say never, but I would
be shocked if it ever repaired itself."
O'Neill eventually bought his
brother out, and O'Neill's son is now
on track to take over the business.
He says that his experiences, good
and bad, have better prepared him
to set his son up for success.
"If we'd had all those ground
rules going in and we would have
hit those roadblocks, we could have
gone back to the agreement that says
here's how you've got to do this.
You can't supersede the agreement
because it was all laid out." - ANC

SCOTTSVILLE AUTO GROUP

PHOTO: GARRETT SCOTT

SCOTTSVILLE AUTO GROUP IS
made up of three dealerships in
Alberta: Kipp Scott GMC-CadillacBuick, Gord Scott Nissan and Scott
Subaru.
Garrett Scott started the Subaru
franchise on his own, and the transition in ownership of the remaining
stores from his father is in process.
"How we structured ours was
more like a buyout," he said. "We
sat down and figured out where my
father wanted to go and how much it
was feasible to afford over a 10-year
period.
"We estate froze them all at the
same spot and sold everything to
each other as an asset of 50-50 per
person, and then within our unanimous shareholder agreement I've got
the first right of refusal. That way,
my father is accumulating a little
bit of money, and so am I to help pay
that back down.
"I don't have the full obligation of
the 100 per cent right up front, just so
we don't cripple any possible expansions that we need to do over the
course of time."
Scott has a younger sister. What
the family finds works best for their
situation is to have her portion of the
succession come through real estate.
"My sister has no interest in the
car business," he said. "We ended up
just taking operations and separating
those from land ownership.
"It's a value that we all agreed
upon, and we do have some pretty large land holdings, so it's not a
small chunk. That gave my dad and
my mom peace of mind that, as long
as the businesses are still where they
are, my sister would have some revenue to generate should she not be
working or not having success in
her other career. I was fine with that
because that kept siblings out of the
operations and kept a lot more clarity in our partner agreements and
who's entitled to what." - ANC

My sister has no interest in the car business. We ended up just taking
operations and separating those from land ownership.
GARRETT SCOTT

Scottsville Auto Group

GROUPE VINCENT

Determining what
family members
deserve: 'It is a very
difficult process, but
one that eliminates
future frustration'
GROUPE VINCENT HAS THREE
stores based in Shawinigan, Que.
- one Hyundai, one Honda and one
Mazda - and another Hyundai location in Trois-Rivières.
Group President Maxime Vincent
says that both his parents were
involved in developing the succession plan for the business as well as
his brother, himself and a management company that controls the real
estate.
"My role was to determine a new
family structure that matched the
level of the contributions to the company," he said (translation from
French to English).
"The transaction took more than
a year to finalize."
The challenging part of that was
not the administrative side, he said,
but that the highly personal nature
of it was stressful at times.
"Everyone is different, so everyone brings a different value to the
company," Vincent said. "In my
opinion, the percentage of share
should reflect the value brought by
each individual.
"Obviously, determining each
shareholder's percentage was a challenge where the emotional side often
took over. If there is more than one
person in the succession plan, it is a
top priority to determine the roles,
the wishes, and the capability of
the passive and active shareholders [and] it is important above all to
ensure that all shareholders understand.
"It is a very difficult process, but
one that eliminates future frustration and maintains a more united
succession." - ANC

TOWNE AUTO GROUP

PHOTO: HAL SOMERS

Brothers as 50-50
partners: 'We've made
application with Ford
to have the boys in the
succession plan'
HAL SOMERS OWNS TOWNE
Auto Group, consisting of three dealerships - one Ford, one Chrysler
and one Mazda - in Miramichi in
northern New Brunswick.
He has two sons in their 30s who
are working for the business and are
interested in eventually taking over
as equal partners. The family's succession plan is already under way.
"We've made application with Ford
to have the boys in the succession
plan program with them," Somers
said. "It takes between two and five
years depending on how well the store
does on profitability, market share
and customer satisfaction.
"We've finished one year and got
passed, so hopefully this year will be
the second year and [the sons will]
be able to buy into the company and
start to acquire shares. The rest
of the stores will be following suit
as soon as we can get the Ford one
under our belt."
Somers has set up a trust that
accumulates a percentage of the profits from the business.
"That's still controlled by me until
the time comes for them to actually
write a check and take ownership,"
he says. "We can set the money aside
tax free for now, and then hopefully whenever the time comes the tax
laws have changed a little bit more in
favour of business owners.
"They will be purchasing the operating company, and I will continue to
be a landlord until I pass away. We'll
leave them the properties that way
because it's just a much easier way to
do it. For them to go and borrow the
money to buy the bricks and mortar
and everything, it would be virtually
impossible."
Somers also had each of his children set up a holding company.
"We've got it established that the
shares will transfer to each of their
holding companies," he said. "That's
how we've been able to set up the cash
flow into their companies tax-free
until the time comes that we actually
redeem the shares." - ANC



Table of Contents for the Digital Edition of Automotive News Canada - May 2018 - v2

Automotive News Canada - May 2018 - v2 - Intro
Automotive News Canada - May 2018 - v2 - 1
Automotive News Canada - May 2018 - v2 - 2
Automotive News Canada - May 2018 - v2 - 3
Automotive News Canada - May 2018 - v2 - 4
Automotive News Canada - May 2018 - v2 - 5
Automotive News Canada - May 2018 - v2 - 6
Automotive News Canada - May 2018 - v2 - 7
Automotive News Canada - May 2018 - v2 - 8
Automotive News Canada - May 2018 - v2 - 9
Automotive News Canada - May 2018 - v2 - 10
Automotive News Canada - May 2018 - v2 - 11
Automotive News Canada - May 2018 - v2 - 12
Automotive News Canada - May 2018 - v2 - 13
Automotive News Canada - May 2018 - v2 - 14
Automotive News Canada - May 2018 - v2 - 15
Automotive News Canada - May 2018 - v2 - 16
Automotive News Canada - May 2018 - v2 - 17
Automotive News Canada - May 2018 - v2 - 18
Automotive News Canada - May 2018 - v2 - 19
Automotive News Canada - May 2018 - v2 - 20
Automotive News Canada - May 2018 - v2 - 21
Automotive News Canada - May 2018 - v2 - 22
Automotive News Canada - May 2018 - v2 - 23
Automotive News Canada - May 2018 - v2 - 24
Automotive News Canada - May 2018 - v2 - 25
Automotive News Canada - May 2018 - v2 - 26
Automotive News Canada - May 2018 - v2 - 27
Automotive News Canada - May 2018 - v2 - 28
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