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 An Introduction To Used Car Dealers Nissan Maxima SV Sport Ridgeland WI 54763 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 Sport Ridgeland WI 54763 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 Maxima SV Sport Ridgeland WI 54763 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 Sport Ridgeland WI 54763 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 Sport Ridgeland WI 54763 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 Sport Ridgeland WI 54763 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 Sport Ridgeland WI 54763 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 Sport Ridgeland WI 54763 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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Ridgeland man accused in repeated child molestations
This option gives you access to read as many articles as you wish for one full day (24 hours) on apg-wi.com. Access to e-editions is not included. Does not renew. Gives you full access to APG-WI.com e...
Developer seeking 'a fair hearing' in request to demolish Marion Street home will have appeal heard
The building, which sits in the Ridgeland/Oak Park Historic District ... Lackey, when the roadway in front of it was known as Wisconsin Avenue. Village records show the first floor of the home was con...
Townhomes & Condos For Sale in Oak Park, Illinois - Sept. 2018
Chicago is an 18 unit condo building. 301 W. Chicago is located in Oak Park, Illinois 1 block east of Ridgeland. 317 Wisconsin - 1 home for sale 317 Wisconsin Avenue is a 10 unit condo building. 317 W...
From the files: Ridgeland's Labor Day fair lauded as best
They are all getting along nicely at this writing. Living up to the reputation of being the “best little fair in Western Wisconsin” the annual Ridgeland fair will be held on Labor Day. “Fair Day” at R...
On July 21, 1953, Ellen married Alfred Frederick Luer from Ridgeland, WI, at the Holden Lutheran Church. Ellen stayed home to raise their five children. Together, Ellen and Alfred managed the Peterson ...
WI. Arnie was born on March 6, 1926 to Hans and Pauline (Nelson) Mork in Ridgeland, WI. At the age of 10 he moved to Menomonie. He graduated from Menomonie High School in 1944. After graduation, Arnie ...
United Poultry Concerns Asks Ridgeland, Wisconsin to Drop Chicken Toss
MACHIPONGO, Va., Jan. 30, 2018 /PRNewswire-USNewswire/ -- United Poultry Concerns is joining Wisconsin-based Alliance for Animals in urging the village of Ridgeland, Wisconsin to cancel their February ...
Gary's Ridgeland Dutchmen concert to benefit FAFWA
Gary W. Brueggen of Westby is better known as “Wisconsin’s Concertina Kid” and the lead musician in Gary’s Ridgeland Dutchmen Band. Celebrating 35 years in music the music industry Brueggen is hoping ...
LaVern R Harnisch
AMERY, Wis. — LaVern R Harnisch, 90, of Amery, formerly of Ridgeland, WI passed away Thursday, Nov. 17, 2016, at Golden Age Manor. LaVern (Gopher) Harnisch was born September 26, 1926 in Menomonie to ...
Citizens Community Bancorp, Inc. Closing Two Branch Offices to Streamline Operating Efficiencies
The branches are located in Lake Orion, Michigan and Ridgeland, Wisconsin. We are optimistic, based on the proximity of our other locations, that we will retain many customer relationships because of ...