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 Used Car Dealerships Nissan Leaf S Eleva WI 54738 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 Leaf S Eleva WI 54738 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 5 Perks of Buying From a Car Dealership Nissan Leaf S Eleva WI 54738 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 Leaf S Eleva WI 54738 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 Leaf S Eleva WI 54738 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 Leaf S Eleva WI 54738 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 Leaf S Eleva WI 54738 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 Leaf S Eleva WI 54738 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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Eleva WI - BingNews Search results

  • 30633573.pdf

    EVENT LLOCATIONS & DATES — August 21st: Crystal Lake Campground, Strum Concessions by Eleva-Strum Youth Association August ... La Crosse Concessions by Rush Wisconsin West Soccer Watch Facebook in cas...

  • WI dairy farmers return from NY with possible industry solutions

    Chippewa Falls (WQOW) - An Eleva farmer, and more than two dozen others, from Wisconsin are back home with some new solutions for a struggling dairy industry. They were at a meeting in New York to tal...

  • Wisconsin farmers head to New York for 'Dairy Together Movement'

    EAU CLAIRE, Wis. (WBAY) Farmers from across the Wisconsin are leaving their cattle for a few days to head to New York for the ’Dairy Together Movement.’ Paul Adams' dairy farm has been functioning in ...

  • Eleva dairy farmer to fight for fair prices in New York

    Eleva (WQOW) - An Eleva dairy farmer will wake up Sunday morning ... Now Adams is taking a stand, but he's not alone. More than 25 Wisconsin dairy farmers will follow him to Albany, New York, for the ...

  • 30631007.pdf

    Condensed Listing COMPLETE GREENHOUSE LIQUIDATION Located: (25837 E Mondovi St, Eleva, WI, 54738) At 4-way stop in Eleva, go East on US Hwy 10 approx. 1 block, site is on right. Watch for NIC auction ...

  • Eau Claire Marathon: Full Marathon Results

    Tammi Braund F 39 Cushing WI 3:20:39; 38, William Jurney M 51 Eagan MN 3:20:40; 39, John Harris Jr M 51 Atlanta GA 3:22:41; 40, Christopher Sanders M 19 Blue Earth MN 3:23:18; 41, Michael Beaudrie M 4...

  • Brandon Semingson

    Brandon Allen Semingson, 20, of Eleva, WI, died Friday, March 7, 2014, as a result of a snowmobile accident. He was born July 7, 1993, in Eau Claire, WI, the son of Brett and Melissa (Robertson) Semin...

  • Eau Claire Triathlon individual results

    Chippewa Falls WI 1:33:48 Male Age Group 20 - 29 (Top 3 in each Age Group) 1) 9 Nicholas Beaudrie, 21, Eleva WI 1:23:35 2) 160 Joseph Shook, 22, Chippewa Falls WI 1:28:55 3) 173 PJ Toutant, 27, Minnea...

  • UPDATE: 3rd student involved in crash dies

    Gable (age 14) of Strum, WI, was traveling in the 6500 Block of Walnut Road. The vehicle left the roadway and struck a grouping of trees. McKenna K. Johnson (age 13) of Eleva, WI, was a passenger in t...

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