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 Car Dealerships in the Strangest Places Ford F-150 XLT Ridgeland WI 54763 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 Ford F-150 XLT Ridgeland WI 54763 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 Benefits of Buying From Used Car Dealerships Ford F-150 XLT Ridgeland WI 54763 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 Ford F-150 XLT Ridgeland WI 54763 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 Ford F-150 XLT Ridgeland WI 54763 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. Ford F-150 XLT Ridgeland WI 54763 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, Ford F-150 XLT Ridgeland WI 54763 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, Ford F-150 XLT Ridgeland WI 54763 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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Townhomes & Condos For Sale in Oak Park, Illinois - June 2018
419 Wisconsin - 1 home for sale 419 Wisconsin is a 29 unit condo building located in Oak Park, Illinois east of Harlem Avenue and south of Washington Blvd. 421 S. Ridgeland - 1 home for sale 421 S. Ridgeland is a 7 unit condo building built in 2005.
Renovations are underway for Northpark mall
Technology upgrades that include better Wi-Fi and electronic interactive directories are ... fact this company is coming in there and making tremendous investments," said Ridgeland Mayor Gene McGee. "We believe because of the opportunities we got approved ...
Rice Lake dairy expo is summer practice for exhibitors
The Aqua-Expo Dairy Show in Rice Lake began in the mid-1980s as tryouts for Barron County dairy exhibitors hoping to qualify animals for show at the Wisconsin State Fair ... Turtle Lake and Ridgeland.” Many of the local events have fallen by the wayside ...
STATE OF WISCONSIN CIRCUIT COURT DUNN COUNTY
2. The decedent, with date of birth 10/08/1919 and date of death 04/02/2018, was domiciled in Dunn County, State of Wisconsin, with a mailing address of 221 Tonnar St., Ridgeland, WI 54763. 3. All interested persons waived notice. 4. The deadline for ...
United Poultry Concerns Asks Ridgeland, Wisconsin to Drop Chicken Toss
MACHIPONGO, Va., Jan. 30, 2018 /PRNewswire-USNewswire/ -- United Poultry Concerns is joining Wisconsin-based Alliance for Animals in urging the village of Ridgeland, Wisconsin to cancel their February "Chicken Toss" due to its cruelty to defenseless birds ...
WI. with hospice. Vilas was born December 8, 1942 in Ridgeland, WI to Glen and Violet (Bundy) Minor. He graduated from the Boyceville High School in 1961. He worked as a machinist for several companies before retiring from MJM Elgin. Vilas owned the family ...
LaVern R Harnisch
AMERY, Wis. — LaVern R Harnisch, 90, of Amery, formerly of Ridgeland, WI passed away Thursday, Nov. 17, 2016, at Golden Age Manor. LaVern (Gopher) Harnisch was born September 26, 1926 in Menomonie to William and Mary (Kiegle) Harnisch. LaVern was ...