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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2018 NCAA Division III Cross Country Regional Awards
MIDWEST REGION — Hannah Roeske — Wheaton (Ill.) Roeske, a sophomore from Eleva, Wisconsin, won the individual title at the Midwest Region Championships in 21:21.8. She also won an individual title at ...
Authorities: Driver Was Drunk When He Hit Girl Scouts Along Wisconsin Highway
A western Wisconsin pickup truck driver was drunk when he hit and ... leader who helped her fourth-graders assemble 150 candles for the vigil. She drove in from Eleva-Strum, 30 minutes away. There isn...
Driver who hit Scouts on Wis. road was 'huffing,' officials say
A western Wisconsin pickup truck driver had been “huffing” chemical ... who helped her fourth-graders assemble 150 candles for the vigil. She drove in from Eleva-Strum, 30 minutes away. “There isn’t m...
WI Girl Scouts, Parent Killed by Pickup
5 -- CHIPPEWA FALLS, WI -- Holding candles in paper cups and huddling beneath ... helped her fourth-graders assemble 150 candles for the vigil. She drove in from Eleva-Strum, 30 minutes away. “There i...
Three Girl Scouts and parent killed in hit-and-run remembered at emotional vigil
She drove in from Eleva-Strum, 30 minutes away ... issued a statement Sunday that Girl Scouts everywhere stand with “our sister Girl Scouts in Wisconsin to grieve and comfort one another in the wake o...
Jayme Closs search: About 2,000 volunteers comb through swamps, cornfields; sheriff calls support 'overwhelming'
About 2,000 volunteers walked through swamps, cornfields and woods in chilly northern Wisconsin on Tuesday ... who lives 60 miles away in Eleva. "I just think anytime it hits close to home like this, ...
Kim R. Brantner
A second celebration will be held in her home town of Eleva, WI at a later date. In lieu of flowers, donations may be made to St. Jude Children's Research Hospital, PO Box 1000 Dept. 142, Memphis, TN ...
Doctors around Eleva, WI: Doctors Around Eleva
AARP offers tools to answer your health care questions, to help manage your health information and to help you learn about medical conditions, symptoms and procedures. Start now by selecting a tool be...
Lyman M. Larson
his sister Carol Erickson of Eleva, WI and his sisters-in-law Shirley Larson of Mondovi, Betty Larson of Racine and Janice Larson of Wisconsin Dells. Funeral Services for Lyman will be held on Thursda...