Methods to valuing a restaurant business
You’ve been spending countless hours searching the internet for a restaurant business to buy. Low and behold you finally stumble upon the perfect one at the perfect price! But how do you know whether a restaurant business is priced fairly? Often an emotional attachment by a restauranteur to his business can lead to him or her to overvalue it. So how can you determine if a business is priced appropriately?
How to value a restaurant business for sale
Income Valuation: This method takes income times a factor determined based on ownership, length of time in business, and a few other facts about the business.
Asset Valuation: This strategy bases a fair selling price on the aggregate value of the business’ assets.
Liquidation Value: If the business is failing, it is worth no more than the value of its assets at clearance.
Income Capitalization: Most accurately applied to large organizations, this rather arbitrary procedure determines a selling price by combining historical data with projected future income.
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