The 68-year-old, owner Z, of a well know bar & restaurant was considering retirement. Owner Z and their businesses were located in a semi-regional town heavily reliant upon the mining industry and was at a point where they wanted to sell their business interests and needed to identify a potential sale price.
Owner Z ultimately owned 100% of Company X Pty Ltd which held the operational business of the bar & restaurant, along with other unrelated income generating real estate. Although the operational business and real estate had no practical synergies or overlapping operations, the financials of both were amalgamated.
InteleK educated the owner on the potential high-level differences/considerations from a valuation perspective between an equity sale of the whole Pty Ltd, as opposed to an asset sale individually of the operational business & real estate, and advised the client that legal, tax and sale advice was also required for the client to decide on the best path ahead, given their personal circumstances.
Following this discussion and consultation with their other advisors, owner Z decided they would advertise and attempt to sell the bar & restaurant and real estate separately, as individual assets sales.
InteleK independently valued the bar & restaurant as a valuation engagement, where we assessed the income, market and asset/cost approaches in forming our opinion of value. The bar & restaurant was a very well-known local venue with high business goodwill, generating positive cashflow with little competition in a location where average salaries are materially above the national average. Albeit the existing space and infrastructure was being fairly well utilized, the bar had only recently started catering to outside events/businesses and had plans and the capacity to materially expand the existing kitchen to support growth in this part of the business. Ultimately this was captured in a discounted economic income/DCF method under the income approach, where we also considered the relevant business broker (AIBB) databases for any applicable market comparable sales via the market approach.
We presented our findings as a summary report with a closing explanatory call, where the client and their transaction advisor then used the top end of our range valuation as the starting point of their marketing & advertising campaign to sell the business.