A common dealership valuation technique adds the cost of a store’s material assets to its blue sky — its intangible value, including goodwill — to determine how much the store is worth.
Here’s an example of how to calculate blue sky by using multiples of earnings, according to Will Mustian, a partner at accounting firm Forvis Mazars. He spoke during a Colorado Automobile Dealers Association webinar in June.
Say a rural dealership group has earnings derived equally from one Nissan and one Kia dealership.
Dealership buyers covet some franchises more than others. Kia dealerships in 2025 had blue sky multiples averaging 4.5 to 6 times earnings, while Nissan stores averaged multiples of 3 to 4 times earnings, according to data from buy-sell advisory firm Haig Partners, which Mustian cited during the webinar.
Factors including earnings, market population growth potential and dealership real estate expenses also influence multiples, according to Kerrigan Advisors, a dealership sell-side firm that Mustian also cited.
The hypothetical group has stable but low-growth earnings, and its Nissan store needs renovation. So the Kia dealership might receive a multiple of 5 times earnings, and the Nissan dealership a multiple of 3 times earnings, Mustian said.
Since each store contributes half the group’s income, the combined business deserves a blue sky multiple of 4 times earnings, Mustian said. If the group had $1.5 million in earnings and $1.5 million in assets, the business’ “raw value” would be $7.5 million, he said.
Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of more than 445 franchises generating more than $10 billion in client proceeds, including two of the largest transactions in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group and Leith Automotive to Holman. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors is the only firm in auto retail exclusively dedicated to sell-side advisory, providing its clients the assurance of a conflict-free approach.
Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, the industry authority on dealership buy/sell market trends and valuations and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases The Kerrigan Index™ comprised of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2025 Kerrigan Dealer Survey, click here. To read the 2025 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.
Contact us to learn more about Kerrigan Advisors’ sell-side services.
All of our conversations are 100% confidential.
