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 5 Perks of Buying From a Car Dealership Chevrolet Silverado LTZ Durand WI 54736 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 LTZ Durand WI 54736 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 Is Now the Right Time to Buy a Car Dealership? Chevrolet Silverado LTZ Durand WI 54736 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 LTZ Durand WI 54736 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 LTZ Durand WI 54736 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 LTZ Durand WI 54736 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 LTZ Durand WI 54736 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 LTZ Durand WI 54736 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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Circuit judge candidate accused of violating alcohol beverage laws; Roager Hillestad calls charges ridiculous
A Durand, Wis., attorney running for circuit court judge in Buffalo and Pepin counties stands accused of violating Wisconsin alcohol beverage laws. The state Department of Justice has filed an eight-count complaint accusing Roger M. Hillestad of running an ...
Durand, WI (54736) 10 Day Weather
<img class="styles-A54tP4F3__noscript__12c_l" src="https://dsx.weather.com/util/image/w/ricardnineteen.jpg?v=at&w=320&h=180&api=7db9fe61-7414-47b5-9871-e17d87b8b6a0" srcset="undefined" > The Result of Back-to-Back-to-Back Nor'easters? Too Much Snow ...
WIAA boys preview 2018: Marathon vs. Clear Lake
MADISON (WAOW) -- The 103rd annual Wisconsin Interscholastic Athletic Association Boys ... and they are the champions of the New Richmond Sectional after downing Durand 51-44 in the final. 3-Point Challenge - 9:30 a.m. Division 5 Championship Game ...
King's Sydnee Roby, Milwaukee Academy of Science's Williams unanimous all-state picks
Wisconsin Dells; Mia Morel, fr., Marshall; Madelyn Neff, sr., Hayward; Kiarra Otto, jr., Laconia; Heather Pearson, sr., Amherst*; Kailee Van Zeeland, sr., Wrightstown. Emily Annis, jr., Durand; Sara Dax, jr., Kewaunee; Lexi Donarski, soph., La Crosse ...
52-year-old Durand man killed in a single-vehicle crash in Wisconsin
DURAND, Ill. (WIFR) -- The man killed in a single-vehicle accident on March 9th has now been identified as a 52-year-old man from Durand. The accident happened around 11:30 p.m. on S. Nelson Road in the Town of Avon, Wisconsin, which is about 10 miles ...
High school basketball roundup: Chris Thompson, G-E-T boys push Wisconsin Dells, but fall short in Division 3 sectional semi
Wisconsin Dells (24-1) will play the winner of Thursday ... Alex Weiss had a team-high 20 points on the strength of four 3s. ALTOONA, Wis. — Durand started fast, building leads of 19-9 and 34-22 in the first half, but Melrose-Mindoro (19-5), behind ...
Merlin James Johnson
Merlin was born on June 12, 1939 and passed away on Wednesday, January 31, 2018. Merlin was a resident of Wisconsin at the time of passing. He graduated from Durand High School. He is preceded in death by his parents; wife, Jacquelyn; cousins, Ronald (Judy ...
Robert Henry Goodrich (60) of Durand, WI died Saturday, November 18, 2017 at Sacred Heart Hospital in Eau Claire, WI. He was born January 4, 1957 in Durand, WI; son of Robert and Denise (Nicklas) Goodrich. He graduated from Durand High School in 1975.
Drunk Driving Crash Suspect Causes 4-Car Pileup on Durand
MOUNT PLEASANT, WI — A 48-year-old Illinois man accused of driving drunk ... officers from the Mount Pleasant Police Department were dispatched to the intersection of Durand Av. and Oakes Rd. in reference a multiple vehicle injury accident.
Durand holds off Juda in border battle
Durand's girls basketball team had a 21-6 halftime lead, but had to finish strong in a 33-31 win over Juda (WI) Tuesday night. Durand's Katelyn Kalina hit a three pointer toward the end of the third quarter to give the Lady Bulldogs a 28-16 lead.