After 25 years, consummating over 700 transactions and reviewing thousands of dealership operating statements, we have developed a valuation model and proprietary algorithm that reviews, calculates, compares and scores over 50 aspects of the uniqueness of your dealership.
- Are you curious to know the value of your dealership in today’s environment?
- How have recent years impacted the value?
- Would this influence your plans for the next 5 years?
- Selling stock to a partner or a family member?
WE CAN HELP YOU WITH
THE ANSWERS THAT IMPACT THE VALUE OF YOUR DEALERSHIP.
Valuing a dealership should only be attempted by someone familiar with business valuation principles and with a thorough understanding of the industry. Depending on your needs/plans, we suggest that you hire someone who is independent and an arm’s-length from the operation.
- Do you have any environmental concerns?
- Is your facility image-compliant?
- Are you paying fair-market rent?
- Do your financial statements accurately reflect the health of the dealership? If not, what might become an issue during an audit or in a buy/sell process?
DETERMINING YOUR DEALERSHIP’S VALUE
SPECIFICALLY THE GOODWILL
Determining the value of an enterprise and understanding how to calculate the value of a dealership, especially the goodwill portion, is critical. It is a complex process and yet, a large part of it is an art and not an exact science.
Unlike residential homes, there are no comparables to rely on. Multiple listing services do not exist in our industry, and even if a centralized data center existed, it should not be used, since each dealership is totally unique.
The values of two dealerships selling the same brand, showing the same sales and netting the same amount, could vastly differ for a multitude of reasons.
Values vary based on the premise of the valuations, and therefore the reason and circumstances for the valuation should be specified.
A return on investment is by far the most acceptable method of dealership’s valuation used by public companies, bankers and individual buyers. It is also the easiest method for car dealers to understand. In determining which approach to use, discretion has to be used. Each method of valuations has advantages and flaws. A measure of common sense and expertise has to be applied. Although the earning approach is most common, a combination of valuation methods should be used to arrive at current market value.
As part of our valuation, we normalize the financial statements in context of the scope of the valuation. We also attempt to predict future trends and use known industry comparatives in order to compare the dealership to other similar brands in similar markets. Such comparisons help us with the risk assessment calculation as well. We of course analyze common items like: location, manufacturer, past trends, liquidity, inventory turnover, profitability, management team, leases and contracts, employment agreements, facility issues, etc.
In an integrated manner and in the context of the specific facts and circumstances of the subject dealership, an appropriate application of all valuation approaches, along with the use of our proprietary algorithm, will result in the most accurate and current market valuation of the dealership.
We have sold hundreds of dealerships and have our fingers on the market’s pulse. We deal daily with buyers and sellers nationally and gather their input and perspective. We fine tune our algorithm and formulas monthly to remain current with market conditions, brand and region desirability. Additionally, because of our high business volume, we often see the trends forming ahead of time.
WE WELCOME THE OPPORTUNITY TO BE OF SERVICE.