The considerations for valuing a dealership are rather complex and definitely unique to each specific dealership. In June 1995 NADA publication referred to rule of thumb as a ‘greater fool theory’. Later on in a 2004 publication, it further stated that it is “rarely based upon sound economics or valuation theory”.

We agree of course! However, dealers tend to look for a rule of thumb to ascertain the value of their dealership.

So, let’s see what the calculator will come up with.

RMV has programmed the calculator to assign value to specific categories. These values are then weighted, compared to internal comparatives on closed transactions, weighted against business models we have developed, and of course we apply a few rules of thumb ourselves to the mix......

There are several assets in your dealership that are of value. Items like real property and improvements, goodwill, new and used vehicles, parts and accessories, cash, other assets, etc. In this exercise, the calculator is only going to deal with the intangible portion of your dealership, what is commonly referred to as blue sky.

Please take just a few minutes to answer the following 25 questions and let’s see what the calculator will come up with. You will need 2008 and 2009 financial statements for this exercise.