Yorkshire-based AM100 dealership group Cars2 has been sold by its shareholders to an Worker Ownership Trust (EOT).
Cars2 operates from 17 sites, retailing latest and used vehicles from brands including Hyundai, Nissan, Renault, MG, Dacia and Seat, in addition to Chinese manufacturers Omoda and Jaecoo. Alongside this, the corporate operates a prestige used automotive dealership, stocking premium used cars, including McLaren, Ferrari, Bentley and Porsche.
An EOT allows company owners to sell part or all of their business, freed from capital gains tax, to their employees, without requiring any changes to the management structure, as the customer is usually a trustee acting within the interest of all staff.
Yorkshire-based AM100 dealership group Cars2 has been sold by its shareholders to an Worker Ownership Trust (EOT).
Cars2 operates from 17 sites, retailing latest and used vehicles from brands including Hyundai, Nissan, Renault, MG, Dacia and Seat, in addition to Chinese manufacturers Omoda and Jaecoo. Alongside this, the corporate operates a prestige used automotive dealership, stocking premium used cars, including McLaren, Ferrari, Bentley and Porsche.
An EOT allows company owners to sell part or all of their business, freed from capital gains tax, to their employees, without requiring any changes to the management structure, as the customer is usually a trustee acting within the interest of all staff.
This business structure allows employees to collectively have a controlling interest within the business although they don’t take direct ownership of any shares as they’re beneficiaries of the trust. Once an organization is owned by an EOT, it may possibly pay annual bonuses to its employees freed from income tax.
Two foremost conditions enable the tax breaks – the trust must hold greater than 50% of the shares in the corporate, and if employees receive any profit from the trust they have to all be included and on the identical terms.
Following completion of the sale for an undisclosed sum, founding owner Allan Otley will remain as chief executive, alongside the remaining of his senior management team which will remain in post to oversee the corporate through the following stage of its growth.
Otley said: “I’m thrilled to have the ability to pass on the success of Cars2 to the workers, and to see them rewarded for his or her efforts in driving the business forward.”
Now employing greater than 250 staff, Cars2 has expanded significantly since Otley began the business in 2006 as a single site used automotive business.
From the beginning, Otley’s vision was to create a small group of franchised automotive dealerships, inside an hour’s drive of each other, which might maintain a 3% RoS.
In 2007, he realised his plan so as to add a franchised site when he acquired Citroën in Keighley, before selling that location five years later because the group looked to determine a more compact market area.
Cars2’s breakthrough got here in 2008, when it joined the Hyundai franchise. The brand was about to embrace the Government’s vehicle scrappage scheme which took its registrations from 28,000 in 2008 to 56,000 in 2009 and revenues from £3.3m to £13.8m inside three years.
In 2011, Cars2 added Hyundai Bradford to the portfolio after it acquired a former Audi site in the town to create a ‘flagship’ facility for the South Korean brand, before acquiring the Barnsley Peugeot franchise from Harratts in December of the identical yr.
Cars2 went on to put in Fiat/Abarth and Renault/Dacia in a multi-brand site on the location of that Peugeot franchise, after the group decided to finish its relationship with the PSA Group brand.
Car2’s success was evidenced by the bid in late 2022 by Scottish automotive retail giant Arnold Clark to accumulate the business which had broken into the AM100 rankings that yr because the 99th largest UK dealership ranked by turnover. Negotiations between the 2 businesses nonetheless failed when the 2 parties couldn’t agree financial terms. The business has since risen to 96th place on this yr’s AM100 rankings.
In an AM dealer profile interview, Otley described the way it had taken over a decade to rework what was a solus independent used automotive forecourt on Pontefract Road, Barnsley, right into a cash-rich franchised retail group with aspirations of becoming a £250m turnover business while maintaining its return-on-sales (RoS) figure of greater than 3%.
Cars2 joins franchised automotive retail business West-Yorkshire based Peter Ambrose Peugeot and AM100 franchised dealer Glyn Hopkin Group as an EOT.
Founder and managing director Peter Ambrose also remained in position as a part of a 2022 handover means of the £25 million turnover business to the newly-formed Peter Ambrose (Castleford) Trustee operation.
Glyn Hopkin Group said its 2024 acquisition by an EOT ensured that the group could proceed its growth strategy, safeguarding the brand’s legacy, ethos, and core values, while also securing a smooth succession plan without altering the leadership team
Josh Stokes from Yorkshire-based Castle Square’s Corporate Finance team advised Cars2 on transaction value, structuring, manufacturer approval and the fundraising process.
Legal advice was provided by Lisa Wallis and Ellie Davies, while Alex Angelides and Adrian Hackett, all from the Sheffield office of law firm Freeths, advised on tax. Sam Drummond, from the Barclays Retail & Wholesale team, worked to offer funding on behalf of the bank.
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This Article First Appeared At www.am-online.com
