NADA has announced the release of “A Dealer Guide to Dealership Valuation,” which is designed to help dealers and their advisers understand the process of valuing automobile and heavy-truck dealerships as well as the various factors that influence dealership value.
The guide, prepared for NADA by Moss Adams, covers situations such 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 and litigation settings including divorce and dispute.
The guide discusses the importance of analyzing historical earnings and cash flow, estimating future cash flow and determining a reasonable return on investment. It also describes the steps in the appraisal process, outlining the income, market and asset-based approaches to valuation, NADA says.
It provides numerous examples, formulas and worksheets and addresses special valuation considerations such as discounts for non-controlling interests, valuation of personal versus corporate goodwill (Blue Sky), valuation for key employee ownerships, and valuation for federal tax matters, including the relevance of IRS Revenue Ruling 59-60.
Furthermore, the guide examines changes resulting from the Tax Cuts and Jobs Act of 2017 as well as suggests strategies to maximize dealership value and prepare for exit.
For more information on the guide, CLICK HERE.
