Blue Sky is the intrinsic value of an automobile dealership, over and above the value of its tangible assets. It is sometimes equated to the goodwill of a car dealership.
Most articles regarding the blue sky value of new car dealerships cite a multiple of earnings formula, such as three times earnings, four times earnings, and so forth. The idea that “blue-sky” can be determined by anything times anything is just plain wrong.
Even NADA the How to Approach Used Car Dealers Chevrolet Colorado Z71 Cornell WI 54732 National Automobile Dealers Association in its publication entitled “A Dealer Guide to Valuing an Automobile Dealership, NADA June 1995, Revised July 2000 bemuses, in part, with respect to valuing a dealership by using a multiple of earnings: A Rule of Thumb valuation is more properly referred to as a “greater fool theory.” “It is not valuation theory, however.”
In its Update 2004, NADA omitted its reference to “fool”, but referred to the multiple formula as Chevrolet Colorado Z71 Cornell WI 54732 rarely based upon sound economic or valuation theory, and went on to state: “If you are a seller and the rule of thumb produces a high value, then this is not a matter of great concern. Go for it, and maybe someone will be stupid enough to pay you a very high value.”
A dealership’s blue sky is based upon what a buyer thinks it can produce in net profit. If potential buyers think it 5 Perks of Buying From a Car Dealership Chevrolet Colorado Z71 Cornell WI 54732 cannot produce a profit, the store will not sell. If it can produce a profit, then variables such as desirability of location, the balance the brand will bring to other existing franchises owned, whether or not the factory will require facility upgrades, and so on and so forth, determine whether or not a buyer will buy that particular brand, in that particular location, at that particular time.
I have been consulting with dealers for nearly Chevrolet Colorado Z71 Cornell WI 54732 four decades and have participated in over 1,000 automotive transactions ranging from $100,000 to over $100,000,000 and have never seen the price of a dealership sale determined by any multiple of earnings unless and until all of the above factors have been considered and the buyer then decided he, she or it was willing to spend “x” times what the buyer thought the dealership would earn, in order to purchase the business opportunity.
To think Chevrolet Colorado Z71 Cornell WI 54732 otherwise would be to subscribe to the theories that (1) even though you think a dealership could make a million dollars, the store is worth zero blue sky because it made no money last year; and (2) if a store has been making $5 million per year you should pay say 3 times $5 million as blue sky even though you think you will not produce that kind of profit. Both propositions are absurd. Chevrolet Colorado Z71 Cornell WI 54732 If a buyer does not think a dealership is worth blue sky, then what he is really saying is that he sees no business opportunity in the purchase and therefore, in my opinion, he should not buy the store.
Each dealership is unique with respect to its potential, location, balance that its brand brings a dealer group, and condition of facility. The sale is also unique with respect to whether it is a forced liquidation, Chevrolet Colorado Z71 Cornell WI 54732 orderly liquidation, arms length, insider, or a case where an anxious buyer is trying to induce an unwilling seller. There are management factors to consider, length and term of leases, possibilities or non-possibilities of purchasing the facilities and whether or not the factory wants to relocate the store or to open a new store up the street.
In the car business it is impossible to pick a dealership or a franchise out of a hat, Chevrolet Colorado Z71 Cornell WI 54732 multiply its earnings by some mystical number and predict either what the dealership is worth, or what price it would sell for – and it doesn’t matter if you are talking about a Toyota, Honda, Ford, Chevrolet, Chrysler, Dodge, or any other dealership. At any given time one franchise might be considered more or less desirable than another, but they are all valued in the same manner.
Cornell WI - BingNews Search results
Welcome to the Thunderdome: World-class ice climbing in Spokane’s backyard
Over the course of the next several days, with good weather propelling them, Coldiron and Cornell put up two more big first ascents: The Road Warrior WI 5 M5, 1,000 feet and Master Blaster WI 4 M5, 1,500 feet. “It was amazing really. We sent the three ...
March 19-25th Cornell hardware 406 main street Cornell WI PH 715.239.2005 Store hours: Monday- Friday 8-5:30 Saturday 8:30-4 • Sunday Closed
New book on Cornell railroad details intertwining of transportation with Chippewa County daily life
They'll be the fourth, fifth, sixth and seventh books for the retired Barron High School math teacher, who also authored “The Chippewa Valley Line" and other books on Wisconsin railroad history. His most recent release, “The Cornell Line,” details ...
Yale and Cornell Top First USRowing Collegiate Coaches’ Polls of the Year
Also Receiving Votes: St. Joseph’s University, Georgetown University, University of Virginia, University of Michigan, Hobart College, Santa Clara University, University of California at Santa Barbara Voting Coaches: Todd Kennett (Cornell), Scott Gavin ...
Serving Our Country - Veterans Highlights: Ralph W. Cornell
This option gives you access to read as many articles as you wish for one full day (24 hours) on apg-wi.com. Access to e-editions is not included. Does not renew. Gives you full access to APG-WI.com except the newspaper e-Editions. $7.00/month recurring ...
It's Boston University vs. Cornell, Northeastern vs. Michigan in NCAA Northeast Regional hockey at DCU Center
Cornell (25-5-2) earned a regional No. 1 seed for the first ... finished the regular season on a six-game unbeaten streak and defeated Wisconsin, 6-5 and 7-4, in two Big Ten Tournament quarterfinal games. Michigan (20-14-3) fell to Ohio State in overtime ...
Cornell, WI (54732) 10 Day Weather
<img class="styles-A54tP4F3__noscript__12c_l" src="https://dsx.weather.com/util/image/w/317geyser.jpg?v=at&w=320&h=180&api=7db9fe61-7414-47b5-9871-e17d87b8b6a0" srcset="undefined" > <img class="styles-A54tP4F3__noscript__12c_l" src="https://dsx ...
Charles E. Baker
Charles was born on November 30, 1940 and passed away on Sunday, March 11, 2018. Charles was a resident of Cornell, Wisconsin at the time of passing. Private Family Inurnment will be in the Cornell Cemetery at a later date. May God bless you and your...
Cornell, Churchill to be honored by KBA
Additionally, Cornell has claimed 11 KBA city titles and five Wisconsin state titles. He fired an 800 series and a 300 game at state in Oshkosh in 2013. Cornell becomes the 54th bowler elected to the KBA Hall of Fame. Churchill, meanwhile, joined the KBA ...
Shaver leads Wisconsin women past Cornell
Sophia Shaver scored twice as the top-ranked Wisconsin women's hockey team beat No. 7 Cornell 3-1. Alexis Mauermann also scored for Wisconsin. It was her seventh goal of the season. Wisconsin improved to 15-0-0 on the season. Cornell fell to 3-2-0.