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 Seven Strategies to Evaluate a Car Dealership GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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 GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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 An Introduction To Used Car Dealers GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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 GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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 GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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. GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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, GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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, GMC Sierra K1500 SLE Z71 Menomonie WI 54751 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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MenomonieAuctions.com - ONLINE AUCTION CENTER - N4792 Hwy. 25 South Menomonie, WI Travis Lee – Broker/Auctioneer 715-235-9200 Monthly Online Auctions - Exciting Live Auctions – Real Estate Auctions – Traditional Real Estate Listings – 320 19th Ave.
C and H Storage 421 Cedar Ave W., Menomonie, WI
C and H Storage 421 Cedar Ave W., Menomonie, WI is selling the personal property owned by Ryan Schofield, Menomonie, WI stored in Unit #11. Misc small furniture, bicycle, small tools, boxes and tubs. Sale to be at storage site Tuesday, July 03, 2018 @ 10 ...
STATE OF WISCONSIN CIRCUIT COURT DUNN COUNTY NOTICE OF SHERIFF'S SALE
PROPERTY ADDRESS: 1528 Cedar Falls Rd., Menomonie WI 54751 TERMS OF SALE: Cash. Purchaser is responsible for payment of the real estate transfer fee and Sheriff's Deed recording fee. DOWN PAYMENT: A deposit of 10% of sale price to be deposited in cash or ...
Big Ten QBs: Undisputed starters to battles in Minnesota, elsewhere
Nate Stanley, Iowa: The Menomonie, Wis., native won the Hawkeyes’ starting ... so Stanley could be even better in his junior season. Alex Hornibrook, Wisconsin: Though the Badgers will try to bludgeon you with their running game first, Hornibrook can ...
Council nixes renewal of Rehab's alcohol licenses
Acting on a tip about underage activity from confidential informants, Menomonie police — aided by University of Wisconsin Stout police and Dunn County sheriff's deputies — issued an unprecedented number of tickets, including 45 underage drinking ...
Area's Rage 2023 team takes 1st in Wisconsin tourney
The Minnesota Rage 2023 basketball team took first place in the Memorial Day Under Armour Classic on May 26-27, at The University of Wisconsin-Stout in Menomonie, Wis. Front row: Macy Beltz (Lake City), Paige Klug (Caledonia), Alexis Schroeder (Caledonia ...
STATE OF WISCONSIN CIRCUIT COURT DUNN COUNTY SUMMONS BY PUBLICATION
The demand must be sent or delivered to the Court, whose address is Clerk of Court, Dunn County Judicial Center, 615 Stokke Parkway, Menomonie, WI 54751 and to Christina M. Mayer, MAYER & HUFF, S.C., plaintiffs' attorney, whose address is 700 Wolske Bay ...
UPDATE: Couple sought in western Wisconsin shooting arrested
MENOMONIE, Wis. (AP) -- Two people suspected in a weekend shooting in northwestern Wisconsin are under arrest. The Dunn County Sheriff's Office says the 34-year-old Red Wing, Minnesota man and 36-year-old Ellsworth woman were taken into custody Thursday.