How to value a restaurant business for sale

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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