Blue Sky Valuation refers to a hybrid business valuation method which is used to estimate the fair market value of automobile dealerships or franchises. The hybrid method involves a combination of the asset method and the income method to determine the fair market value of the dealership or franchise. The first element of the method is the blue sky value which is an intangible value of the automobile dealership over and above the tangible value of the tangible assets.  The blue sky value is measured as a multiple of pre-tax earnings (referred to as a blue sky multiple).  In the United States, the sources of the blue sky multiples include firms such as Haig Partners and Kerrigan Advisors. These firms publish blue sky multiples of vehicle brands and franchises quarterly from a large number of current transactions’ data. Business valuators determine the blue sky value by multiplying by pre-tax earnings by the blue sky multiple. The second element of the method is the net assets value (value of tangible assets) determined from the adjusted balance sheet. To estimate the fair market value of an automobile dealership, business valuators add the blue sky value and the net asset value. The blue sky valuation method, also referred to as Combination Valuation Method or the Hybrid Method, is the most suitable method applied in the valuation of automobile dealerships.