How to get a rough valuation for a small business?
Hello WSO community,
I need your help at roughly valuing a business. It is a restaurant with an adjacent hotel and catering in a mid-sized town (75k) in Germany. Restaurant is high-end, the hotel has 21 rooms and is four-star standard.
Has 50 employees. Business seems to be going well but due to the coronavirus pandemic it had to temporarily shut down and resort to delivery.
Since the business won't generate a lot of revenue (Limited to take-out orders only, hotel closed) but many fixed costs will stay the same I feel as if it might go belly-up. I sense a fantastic buying opportunity for savy businessmen.
Unfortunately I don't know a lot about the businesse's finances or valuation. This is why I ask you whether you are able to help me.
Since small businesses do not have to publicize everything accounting wise here in Germany I can only give you the data I can access:
2014:
Fixed Assets: €175,000
Liabilities: €651500
Loss: €70,000
Balance Sheet Total: €651,000
2015:
Fixed Assets: €460,000
Liabilities: €832000
Loss: €437,000
B. Sheet T.: €836,000
2016:
Fixed Assets: €390,000
Liabilities: €875500
Loss: €222,000
B. Sheet. T.: €968,000
2017:
Fixed Assets: €377,000
Liabilities: €1184000
Loss: €254,000
B. Sheet T.: €1,200,000
This was all the information I could access. No information about revenue or reservations, unfortunately.
I have been contemplating for almost an hour how I can value this business with such limited information. Unfortunately I could not come up with a method which is why I decided to ask this question here.
I am aware that no exact valuation can be made but maybe some of you can come up with rough estimates
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