There are several reasons an auto dealership group would require a valuation. Among them are:

• Litigation Dispute

• Strategic Planning

• Estate Planning/Wealth Transfer

• Buy-Sell Agreement Dispute

• Death of a Shareholder

• Equity-Based Compensation Issue

A dealership’s value depends on a combination of financial performance, franchise type, location, and market conditions. Key drivers include adjusted profitability, Blue Sky multiples, real estate arrangements, and the strength of the franchise brand. Mercer Capital’s auto dealer team specializes in valuing both single-point and multi-store groups across all major OEMs. We analyze historical and normalized earnings, apply relevant multiples, and consider local competitive and demographic trends. The result is a defensible valuation that reflects fair market value and supports a wide range of purposes, including buy-sell transactions, succession planning, litigation support (including family law/divorce) and estate or tax compliance.

“Blue Sky” represents the intangible value of a dealership beyond its physical assets—brand reputation, customer loyalty, franchise rights, and operational performance. It reflects what buyers are willing to pay above tangible net worth. To estimate Blue Sky value, we adjust pre-tax earnings to normalize performance and then apply market-based multiples derived from recognized industry sources such as Haig Partners and Kerrigan Advisors. Understanding Blue Sky value helps dealers and their advisors negotiate effectively and assess opportunities for ownership transitions, partner buyouts, or sales.

Several factors shape a dealership’s value. Brand reputation, local market demographics, new and used vehicle volumes, and service and parts profitability all play critical roles. Location is especially important—dealers in growing metro areas or representing high-demand brands often command stronger multiples. Broader market forces, including OEM policies, interest rates, and electric vehicle adoption, also affect investor sentiment and transaction activity. Mercer Capital’s analysis incorporates both dealership-specific data and industry trends to capture these dynamics in a credible valuation framework.

The typical dealership valuation takes about four to six weeks after receiving all necessary financial and operational information. The timeline can vary depending on the complexity of the business, number of rooftops, and scope of the engagement. Throughout the process, Mercer Capital maintains close communication with clients—providing regular updates, explaining key assumptions, and ensuring that deliverables meet deadlines and withstand scrutiny from advisors, buyers, or regulatory authorities.

Dealership owners often hold their real estate in a separate entity that leases the property to the operating business. In these cases, we assess whether the lease rate reflects market terms, whether facility investments or upgrades are needed, and how the property’s condition impacts dealership operations. The real estate may be valued separately using an asset-based approach or incorporated into overall earnings depending on structure. When appropriate, Mercer Capital coordinates with real estate appraisers to ensure a consistent and supportable analysis.