Understanding the facts about Car Dealership
In addition, in the above statement, there is no information to help one decide a reasonable value to pay for a dealership. The thumb rules are only guides. Good servants are guides, but bad masters. If a dealer goes under and throws the keys to the building to a prospective buyer and says: “It’s yours. I just want out.” That act does not make the dealership more or less worthwhile. The questions that a buyer has to ask are—(a) ” what is it going to cost me to open the doors?” and (b) “what do I think I will earn after I own the store?” In other words: “What is my expected return on the investment?” Checkout Wischnewsky Chrysler Dodge Jeep Ram Dealership-Huntsville Car Dealership.
There was a dealer group in Colorado at one time that presented an offer to pay them (the purchaser) $2,000,000 for them to take over the stores for the current dealer. The offer was based on projections of what the shops were going to lose while the buyer was trying to turn them around. Before the shops closed, the seller refused and ended up losing several million more. The assets of the dealerships were eventually sold to a church.
A good checklist can be found in IRS Revenue Ruling 59-60, published in 1959 by the Internal Revenue Service, for valuing car dealerships. While the purpose of the ruling (59-60) was to outline and generally review the approach, methods and factors to be taken into account in the valuation of capital stock shares of closely held corporations for the purposes of property tax and gift tax, the methods discussed are applicable to the valuation of an automobile dealer and the valuation of the blue sky in an asset sale simply by backing up the amount of the stock valuation attri
Thinking that they have completed a significant task when verifying earnings. The truth is it does not matter what was made or lost by the seller. It is necessary to apply a plethora of details and formulas to determine what the fresh owner can net. What is the PNUR rent factor that the store can afford? Do the percentage of gross requirements correlate with those numbers?