TO THE EDITOR:
It is important to be open to the other person's point of view. I could not tell if Moshe Stopnitzky was objecting to using a multiple for arriving at an asking price for the dealership or for just arriving at an asking price for the blue sky ("The myth behind 'multiple of earnings,'?" Nov. 27). He says, "In June 1995, an article published by the National Automobile Dealers Association referred to this rule of thumb as a 'greater fool's theory.'?"
Who wrote this article, and why? I prefer to use the NADA guide "Valuing an Automobile Dealership: Update 2004." It is just that: a guide. But it provides a starting place.
I agree other intangibles should be considered, but how does he begin? Where did the first dollar of the $9.5 million goodwill come from in the Chrysler dealership example he cites? And the remainder? Was Jeep a part of the sale? What was his method?
My use of publications containing multiples is limited to sanity checks of what I have developed. How a seller arrives at his asking price will be different from how a buyer arrives at his offer.
I have been associated with the automobile business for 59 years — as a dealership employee, a member of an automotive certified public accountant firm and as a CPA offering dealership valuations. But I am eager to learn new procedures. Because I don't know what Stopnitzky's method is, I don't know what I need to learn.
RICHARD W. NOKES, President, Richard W. Nokes PC, CPA, Memphis, Tenn.