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 The Pitfalls of Buy Here Pay Here Car Dealerships Nissan Altima 2.5 S Altoona WI 54720 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 Nissan Altima 2.5 S Altoona WI 54720 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 Why Car Dealerships Are A Good Thing Nissan Altima 2.5 S Altoona WI 54720 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 Nissan Altima 2.5 S Altoona WI 54720 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 Nissan Altima 2.5 S Altoona WI 54720 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. Nissan Altima 2.5 S Altoona WI 54720 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, Nissan Altima 2.5 S Altoona WI 54720 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, Nissan Altima 2.5 S Altoona WI 54720 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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Ag Chat with Kristin Smith- June 25
ALTOONA, Wis. (WEAU) --U.S. Senator Tammy Baldwin has introduced ... Summer is the best time to enjoy fresh fruit, but be on alert. The Wisconsin Department of Agriculture, Trade and Consumer Protection and Wisconsin Department of Health Services are ...
Cameron's slam, Burrows' strong start fuel SeaWolves' win
The SeaWolves trailed 2-1 going into the bottom of the fifth inning before Altoona (36-33) starter Eduardo Vera lost ... with Class A Quad Cities in an 18-11 win over Wisconsin. The SeaWolves had five grand slams in 2017, including two by Christin Stewart.
BEER/LIQUOR LICENSE APPLICATIONS CITY OF MENOMONIE, WISCONSIN
SYNERGY ON WATER, LLC Elizabeth Hart, 1120 N Moonlight Dr, Altoona WI 54720 Synergy on Water LLC - 631 Broadway. Cally Lauersdorf, City Clerk 6/23 30629123 WNAXLP
GOP Sen. Johnson says Congress must act on immigration
MADISON, Wis. (AP) -- Republican U.S. Sen. Ron Johnson, of Wisconsin, says Congress must act on immigration legislation to address what he calls a "flood of people trying to get into this country illegally." Johnson said in an interview Friday on WTMJ-AM ...
Three western WI schools awarded safety grants, Eau Claire shutout
Western Wisconsin (WQOW) - Three western Wisconsin school districts ... Eau Claire applied for $390,319, Chippewa Falls applied for $205,023 and Altoona applied for $64,525. None of those schools received funding.
American Legion baseball: A's manage split in Wisconsin
HOLMEN, Wis. — The Rochester A’s split a pair of road games in Wisconsin in American League baseball on Saturday. The A’s opened with host Holmen and dropped a 4-2 contest. The A’s then responded with an 8-4 victory over Altoona to improve to 3-1 ...
Gather for a Party on the Prairie
When Wisconsin enters its too-few months of warmth and sunshine, it’s time to take the party outside. Which parties? All of them. The new River Prairie Park off Front Porch Place in Altoona offers seven outdoor locations to host weddings, graduation ...
Donald “Don” L. Davis
A Memorial Service will be held at Kingdom Hall of Jehovah Witness on June 23, 2018 at 3PM. Cremation Society of Wisconsin, Altoona is assisting the family. Online condolences may be shared at www.cremationsociety-wi.com.