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BV News and Trends July 2024

A monthly roundup of key developments of interest to business valuation experts.

Auto dealer valuation formulas have shifted, per Haig report

Until the middle of last year, some sellers of auto dealerships wanted their businesses to be valued based upon an average of the earnings over the past few years, including the pandemic boom times. But, today, buyers are basing their offers on their projections for future profits, which will be below the average from 2021 to 2023, according to “The Haig Report” for Q1 2024.

BV News and Trends October 2022

A monthly roundup of key developments of interest to business valuation experts.

Car dealer blue-sky values remain at record levels, per Haig report

“Blue sky” values are 6% higher than at the end of 2021, and they are at the same level as they were at the end of the first quarter of 2022, according to the Q2 2022 Haig Report.

Court tweaks blue-sky method in valuing a car dealer

A Tennessee appellate court recently considered the Chancery Court’s determination of the value of an oppressed minority shareholder’s interest in an “ultra-high-end” car dealership.

Buckley v. Carlock

The Tennessee appellate court affirmed the Chancery Court’s determination of the value of an oppressed minority shareholder’s interest in an “ultra-high-end” car dealership. The valuation of an expert utilized the “blue sky method,” a rule of thumb method, to value the dealership and ultimately the minority interest. The Chancery Court conducted a hearing on which it heard valuation expert testimony. The appellate court affirmed the Chancery Court’s valuation and its methodology since it was generally accepted by the financial community.

Appellate Court Affirms Use of the ‘Blue Sky Method,’ a Rule of Thumb, to Value a Minority Interest in an Oppression Case

The Tennessee appellate court affirmed the Chancery Court’s determination of the value of an oppressed minority shareholder’s interest in an “ultra-high-end” car dealership. The valuation of an expert utilized the “blue sky method,” a rule of thumb method, to value the dealership and ultimately the minority interest. The Chancery Court conducted a hearing on which it heard valuation expert testimony. The appellate court affirmed the Chancery Court’s valuation and its methodology since it was generally accepted by the financial community.

Multiples Used to Estimate Automotive Dealerships Market Value

Practitioners use goodwill multiples for valuing automobile dealerships. In this paper, the valuation accuracy of five goodwill multiples and seven more traditional multiples that can be used for estimating the market value of the equity of car dealerships is assessed during the 2010–2016 period. Our results support that the goodwill multiples provide the smallest estimation errors in valuing the market value of automobile dealerships.

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