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 Nissan Maxima SV Eau Galle WI 54737 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 Maxima SV Eau Galle WI 54737 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 Seven Strategies to Evaluate a Car Dealership Nissan Maxima SV Eau Galle WI 54737 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 Maxima SV Eau Galle WI 54737 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 Maxima SV Eau Galle WI 54737 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 Maxima SV Eau Galle WI 54737 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 Maxima SV Eau Galle WI 54737 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 Maxima SV Eau Galle WI 54737 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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County: Solid waste permits for 2019 on the way
Residents of non-participating municipalities, such as the city of Menomonie; the Towns of Hay River, Sand Creek, Stanton and Eau Galle ... s website at www.co.dunn.wi.us/swr_fees.
How Much Wisconsin Households Make Per Year: New Census Report
MILWAUKEE, WI -- For those who can never stop comparing themselves to ... Kenosha County ----- $97,981 Eau Galle town, St. Croix County ----- $97,891 Franklin city, Milwaukee County ----- $97,792 Hayw...
Doctors around Eau Galle, WI: Doctors Around Eau Galle
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...
2018 solid waste permits need to be displayed
Residents who live in non-participating municipalities, such as the city of Menomonie, towns of Hay River, Sand Creek, Stanton and Eau Galle, or the village of Knapp ... call 715-232-4017 or email swr ...
Wisconsin Outstanding Young Farmer Finalists Named
This year's nominees include Ryan and Tasha Schleis, Kewaunee; Tony and Katie Mellenthin, Eau Galle; Scott Laeser and Chelsea Chandler ... call 715-833-9649 or go to: http://www.wi-oyf.org.
Tornado Warning Issued For Southeastern Minn.
Severe Thunderstorm Warning including Durand WI, Arkansaw WI, Eau Galle WI until 5:45 PM CDT pic.twitter.com/ttPTTq52Qf WCCO Meteorologist Chris Shaffer says there were confirmed sightings of a tornad...
Mystery Photo #52: The homely mugs of Ella and Dave
Welch of Eau Galle, Wis. On the back of the card, in the upper left corner, are presumably the names of the photo subjects, Ella and Dave.
Sister Helen (Stanella) Lieffring, FSPA
Sister Helen was born to John and Myrtle Helen (Webb) Lieffring on June 28, 1918, in Eau Galle, Wis. She entered St. Rose Convent ... 912 Market St., La Crosse, WI 54601-4782.
Julie Nelson, daughter of David & Charlotte Nelson of Ettrick, WI is engaged to Steve Kitchner, son of Bruce & Juel Kitchner of Eau Galle, WI. Julie is an accountant at Coulee Business Services Inc., ...