The National Automobile Dealers Association (NADA) recently released a guide designed to help owners, principals and their advisors gauge what their business truly might be worth.
In an effort to assist dealers to understand the process of valuing franchised dealerships as well as the various factors that influence rooftop value, NADA explained that its guide covers such situations as:
— Buy-sell transactions
— Estate and gift tax planning or reporting
— Ownership succession planning
— Owner buy-in or buy-out
— Tax reporting due to entity restructuring
— Litigation settings including divorce and dispute
NADA mentioned its guide also delves into the importance of analyzing historical earnings and cash flow, estimating future cash flow and determining a reasonable return on investment.
The association noted its material describes the steps in the appraisal process, outlining the income, market, and asset-based approaches to valuation.
Furthermore, NADA pointed out the guide provides numerous examples, formulas and worksheets as well as addressing special valuation considerations such as:
— Discounts for non-controlling interests
— Valuation of personal versus corporate goodwill (Blue Sky)
— Valuation for key employee ownerships
— Valuation for federal tax matters, including the relevance of IRS Revenue Ruling 59-60
And finally, the guide also examines changes resulting from the Tax Cuts and Jobs Act of 2017 and suggests strategies to maximize dealership value and prepare for exit.
NADA members can find this guide by going to this website.