Values of auto dealerships jumped last year amid a surge of buy-sell transactions, according to “The Blue Sky Report™ 2015 Full Year Report.” Top luxury brands had the biggest increases in blue sky value, which is the dealership’s intangible value, expressed as a multiple of adjusted pretax income. For example, BMW had a blue sky value range of 6.0 to 8.0-plus in 2015, up from 5.5 to 6.5 in 2014. The biggest value driver: new vehicle sales per franchise. Other drivers include location and earnings growth expectations. The robust transaction activity could run out of gas during the second half of this year due to an expected rise in interest rates, the report says.
Extra: BVR recently released a new guide, What It’s Worth: Automobile Dealership Value (formerly Key Trends Driving Auto Dealership Value). Contributors to the guide include auto industry accountants, brokers, M&A executives, former dealership employees and owners, and other consultants.
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