In a seller’s market where dealership values are high, blue-sky multiples rose in the second half of 2013 from first-half levels for three brands’ dealerships, but softened for five brands’, said Alan Haig, president of Haig Partners, a dealership buy/sell advisory firm in Fort Lauderdale, Fla.
The firm detailed its brand-by-brand estimates of blue sky multiples in its Blue Sky Report for year-end 2013, released on Monday.
Blue sky is the intangible value of a dealership expressed as a multiple of adjusted pretax income. Haig Partners estimates the average industry multiple was 4.3 in 2013, up slightly from 2012.
Jaguar, Land Rover and Ford saw their blue-sky multiples increase in the second half, according to the report. But BMW, Mini, Hyundai, VW and Mazda saw theirs decrease. In evaluating blue-sky values, the report tracks Jaguar and Land Rover, and BMW and Mini, as if they were a single entity.
Stable this year
Overall, multiples are likely to be stable throughout 2014, Haig said.
The average multiple is “sort of bumping around the 4.5 number,” he said. “I don’t see that going up a lot. And in fact, when we get to the point when people get concerned about the next recession coming into play, that’s likely to drop sharply.”
But that’s still probably years away, Haig said.
Jaguar Land Rover’s multiple of 4.5 to 5.5, up from 4.0 to 5.0 in the first half of 2013, was buoyed by rising Land Rover sales and profits and promising new products.
Ford was both the top market-share gainer among domestic brands in 2013 and the most desirable brand, as measured by blue sky. The multiple range rose during the second half of 2013 to 4.0 to 5.0, from 3.5 to 4.5 in the first half, Haig Partners estimates.