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 Auto Dealerships – The Sales Dept Sells the First Car Chevrolet Silverado K1500 LT Downsville WI 54735 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 Silverado K1500 LT Downsville WI 54735 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 How to Find Unadvertised Discounts on New Cars Chevrolet Silverado K1500 LT Downsville WI 54735 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 Silverado K1500 LT Downsville WI 54735 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 Silverado K1500 LT Downsville WI 54735 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 Silverado K1500 LT Downsville WI 54735 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 Silverado K1500 LT Downsville WI 54735 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 Silverado K1500 LT Downsville WI 54735 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.
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Downsville WI - BingNews Search results
Gary M. Thibado, age 56, of Downsville, WI died unexpectedly Saturday, April 21, 2018 at his home. He was born February 8, 1962 in Menomonie, WI to William Thibado and Audrey (Warren). He grew up in Downsville and graduated from Menomonie High School.
Joseph (Barbara) Haynes and Michael (Kathy) Haynes. She is the grandmother of seven and great-grandmother of twelve. Funeral Services will be held at 11:00 a.m. Thursday, Dec. 21, 2017 at New Hope Lutheran Church in Downsville, WI with Pastor Dale Moe ...
Ready for Farm-City Day - Sept. 7th
Turn South onto WI-25/Broadway Street. Travel 10 miles to WI Hwy 72 (Downsville, WI). Turn right onto WI Hwy 72 and head West for 4 miles. The farm is located on both sides of the road, but the parking area is located on the right on 290th Street.
Search Downsville, Wisconsin Obituaries
Search Obituaries from more than 25,000 funeral homes. Updated Daily. View All Funeral Homes in Wisconsin Local Downsville Newspapers Search Obituaries from more than 1,500 Newspapers worldwide. Updated Daily.
Scenes of Yesteryear: How Down’s Mill became Downsville
In September 1900, Knapp, Stout & Co. Company was in the final steps of closing its logging operations in Wisconsin, and in that year closed the Downsville mill operations. Five years later, on June 7, 1905, what became known as the “third big flood ...
Tracking a cougar in western Wisconsin
DNR biologists are tracking a cougar in western Wisconsin. They say the same cougar has been spotted in St. Croix, Pierce and Dunn Counties. A trail camera took a picture of the cougar on Saturday night, both south and west of Downsville in Dunn County.
Death Notice: PAUL A. THOMAS III
Thomas III, age 82, recently of Downsville, WI, died from acute complications of Parkinson ... He is survived by children Bruce (Deb), John (Kathy Ruggles), David (Dawn Theelke), and Richard Thomas and Jane Thomas DeFlorin (George); grandchildren Ryan ...
'Little city with a lot' ready for Discover Downsville
Under "Quick Facts," the website backs up the claim with noted credits. Awarded the Dunn County City of the year in 1999, Downsville was also on Wisconsin Trails' "Best Place to Live" list for three consecutive years. Not content to rest on its laurels ...