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 Auto Dealerships – The Sales Dept Sells the First Car Nissan Maxima SV 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 Maxima SV 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 Investing in Car Dealerships – How to Value Them Nissan Maxima SV 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 Maxima SV 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 Maxima SV 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 Maxima SV 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 Maxima SV 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 Maxima SV 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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New book on Cornell railroad details intertwining of transportation with Chippewa County daily life
Like many Wisconsin history buffs, Arlyn Colby of Barron is interested ... The horse and buggy couldn’t take people extensive distances, whereas a railroad could,” Colby – an Eleva-Strum High School and UW-Eau Claire graduate – told the Herald ...
Wisconsin roundup:Feds suggest revised rules for Upper Mississippi River; Amery man accused of animal mistreatment; more state news stories
Authorities got a call from an Eleva resident about a half-hour later ... voters to decide state treasurer’s fate next month MADISON — Wisconsin lawmakers have been trying to eliminate the office of state treasurer for decades, but always fell short.
Three arrested in Trempealeau Co. after multi-agency search for suspect
Wisconsin Department of Natural Resources, Eleva Police Department, Osseo Police Department, Whitehall Police Department and Arcadia Police Department. The Trempealeau County Sheriff's Office said the names of the suspects aren't being released at this time.
BREAKING...New Holstein's Steffes wins state 3-Point contest
The best three-point shooters in Wisconsin high school basketball converged on the ... Steffes scored 22 total points to beat out Eleva-Strum's Drew Sevenson in the finals. Each of the five WIAA Divisions had two entrants in the competition.
Eleva, WI (54738) 10 Day Weather
<img class="styles-A54tP4F3__noscript__12c_l" src="https://dsx.weather.com/util/image/w/primary-temps.jpg?v=at&w=320&h=180&api=7db9fe61-7414-47b5-9871-e17d87b8b6a0" srcset="undefined" > <img class="styles-A54tP4F3__noscript__12c_l" src="https ...
WIAA boys' state basketball tournament ready for Kohl Center
The Wisconsin Division of Quincy Media ... and Division 5 contestants are seniors Drew Haffner of Gresham and Drew Severson of Eleva-Strum.
Augusta vs. Eleva-Strum, ppd. Baraboo vs. Waunakee, ppd. to Feb 21. Coleman vs. Crivitz, ppd. to Feb 24. Lincoln Hills vs. White Lake, ccd. Marshfield vs. Eau Claire Memorial, ccd. Merrill vs. Shawano Comm., ppd. NE Wis. Christian Home School vs.
Eleva Strum's Jedediah Lorenz Following His Father's Footsteps
Eleva, WI (WQOW) -- Sports are often described as a family affair, but for a father-son duo at Eleva-Strum High School, that saying has never been more true. Jedediah Lorenz, a Junior at Eleva-Strum won the Bangor Sectional Pole Vault last week ...
Hauge, Jeanette M. "Jeannie"
WI. Throughout their married life they lived and worked in Milwaukee, Blair and Eleva, WI before settling and retiring in Schofield, WI. At the time of her retirement, Jeannie was a certified meat inspector for the USDA, a job in which she and Bobby shared ...
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) Semingson. He graduated from Eleva-Strum Central High School ...