How thoughtful succession and exit planning are shaping dealership value and continuity
Consolidation continues to reshape Canada’s dealership landscape, bringing long-term planning into sharper focus.
According to Landon Robertson, director of operations and corporate strategy at Templeton Marsh, the current dealer buy-sell market in Canada remains active.
“The market is active and evolving,” Robertson said. “We are seeing continued consolidation among dealer groups across the country.”
In an email response to Canadian auto dealer, Robertson said dealer groups are actively pursuing acquisitions of small- to mid-sized groups, while others are repositioning portfolios to free up capital for strategic growth.
That environment is prompting more dealers to examine ownership transition timelines.
Planning as an enterprise strategy
However, an active market does not guarantee equal outcomes.
“Valuations remain stable amongst desirable brands, while there has been some further softening around lower-tiered brands,” said Robertson.
He noted that market conditions, tariffs and broader economic uncertainty have influenced the timing of some transactions, even as deal activity remains steady.
Where advisors see opportunity, however, is in formal planning — an area many dealers continue to struggle with.
Even when a dealer has a general vision for the future, Robertson said, the structural groundwork may not be in place.
“Many dealers either don’t have a plan or their current plans are inadequate and lack foresight to what is important to the current dealer.”
Even when a dealer has a general vision for the future, Robertson said, the structural groundwork may not be in place. Dealers may have a concept for the future, but discussions with key collaborators such as lawyers, tax specialists and advisors have not taken place, which can result in what he described as an “inadequate blueprint.”
“Whether it is understanding tax implications of a sale, transaction requirements in regard to the OEM, or dealership valuations — without these, dealers risk forgoing value and adding unneeded stress when looking to exit.”
When carefully structured, ownership transitions can help preserve continuity and enterprise value.
Erik St-Hilaire, Kerry Smith, Landon Robertson, and Chuck Seguin
The human and franchise realities
Financial preparation is only one aspect of succession. For many dealers, the more complex considerations are personal.
Chuck Seguin, president of Seguin Advisory Services, said most dealers recognize the importance of thinking ahead.
“Most of the dealers that you talk to have an awareness and an understanding of what they should be doing or could be doing. Whether they are or not is a different ballgame.”
That awareness does not always translate into formal documentation. Seguin said some dealers may have a basic plan in mind, while for others it is more formal. But when succession involves family members, complexity often increases.
“The succession is a much more complicated exercise, and it’s one that’s totally driven by emotion.”
Questions around fairness, generational readiness and long-term leadership capability can influence the direction of a transition.
There is also a structural layer unique to automotive retail.
“Dealerships are franchises, so they just can’t do something without the approval of their franchisor. And a lot of them forget that.”
Preparing a successor can require years of operational and brand engagement, Seguin added. A strong succession plan also ensures potential successors have the academic and business background necessary to understand the broader responsibilities of running a dealership.
Exit paths, timelines and readiness
While earlier succession conversations often centre on family and governance, the transaction mechanics introduce another layer of complexity — particularly in a market that has shifted considerably over the past five years.
“There has been a lot of variability… since COVID in the dealership space,” said Erik St-Hilaire, partner with MNP’s corporate finance group.
Deal activity slowed at the onset of the pandemic before accelerating as interest rates declined. Valuation multiples strengthened significantly during that period, then pulled back as rates rose again in 2022 and 2023. More recently, St-Hilaire said, conditions have stabilized.
“Valuations are good.”
That relative stability, however, does not eliminate structural considerations for sellers.
Kerry Smith, partner and national leader for MNP’s family office group, said many dealers still do not have a formal roadmap in place.
Smith said succession planning extends beyond the transaction itself. Governance clarity, leadership structure and tax planning all influence outcomes — particularly as sellers are becoming younger.
He referenced a forthcoming company report based on research conducted with dealership clients across the country.
“Generally speaking, from what we’re seeing in the early results, there’s still a sizable portion of our dealer clients who just haven’t been able to put together that formal succession plan.”
Smith said the issue is often not philosophical resistance but momentum — uncertainty about how to begin the process.
When those conversations do begin, they tend to narrow to three clear paths.
“When you think about exiting your business, there’s three main options: you sell to family, you sell to management or employees, or you sell to a strategic third party,” said Smith.
Each option presents distinct implications for valuation, risk and timing.
From a transaction standpoint, St-Hilaire said selling to employees can materially affect outcomes.
“You’re generally going to sell for less and in some cases quite a bit less if you’re selling to employees, because they just frankly don’t have the same wherewithal as a well-capitalized third party that has financing in multiple locations and deep pockets.”
In those situations, sellers may also need to accept payment over an extended period or provide vendor financing, introducing additional exposure.
Strategic third-party sales, however, can offer speed and scale — but they still require preparation.
St-Hilaire said some dealers approach advisors with a timeline in mind, often stating that they want to sell within two years, without fully defining what that means.
“It’s like, well, selling to a third party could take six months, it could take a year.”
Even after closing, transition periods may be required depending on management structure and OEM expectations.
In rural markets, additional challenges can arise. Where there is no identified next-level manager prepared to assume leadership, St-Hilaire said that gap can impair a store’s ability to transact or influence valuation.
Preparation, he added, preserves flexibility.
“If you’re waiting too long, it’s too late to do some of these things if you haven’t implemented them early on.”
Smith said succession planning extends beyond the transaction itself. Governance clarity, leadership structure and tax planning all influence outcomes — particularly as sellers are becoming younger.
That demographic shift introduces additional questions around post-sale wealth strategy and long-term lifestyle sustainability.
Smith said some owners focus heavily on multiples and blue sky value without fully considering what happens after closing.
“It’s just about how much — what’s the multiple and how much blue sky am I going to get on my sale — but not thinking about the next steps and what comes after that and the time involved in all these things.”
He added that unresolved structural issues can also surface during due diligence.
“An eroding value, right? As these issues come up, there’s the potential that you’re eroding the value of the business.”
Whether the path is family succession, management transition or a third-party sale, the advice from advisors remains consistent.
“Start today.”
