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Value/Post Ratio
87%
- Oct 26, 2021
- 69
- 60
Hi guys,
I am looking into buying a resort (have no experience buying businesses). So they send over their financials. They are asking for 2500.000, but they are only made 116K net last year.
(Average Sellers Discretionary funds SDF 130K from 2017-2019), not sure how they can go from 130K untaxed to 116K taxed.
Why they are sending me that old data over instead of 2020-2021-2022 I am not sure either. (covid prolly, but still that is the most relevant info).
Combined EBITDA for 2017-2019 was $462,507, with an average EBITDA of $154,169. Multiply that amount x 5 for a business value of $770,845.
When you total the elements of business value ($770,845), real estate and associated value ($1,524,490), and goodwill ($204,665), you see the basis for the asking price of US$2,500,000.
(Real estate looks like a real stretch, as they lease the land for 2K a year.)
I don't know anything about EBITDA yet, or how to read these financials properly. Any tips on how to learn this kind of stuff the fastest? Any book/video/games recommendations?
First thoughts are that this resort is a dud, but tbh I don't have the financial understanding yet to be sure. (as it looks I need to work 25 years just to break even, prolly some more as there will be renovations/boat repairs etc).
Thanks!
I am looking into buying a resort (have no experience buying businesses). So they send over their financials. They are asking for 2500.000, but they are only made 116K net last year.
(Average Sellers Discretionary funds SDF 130K from 2017-2019), not sure how they can go from 130K untaxed to 116K taxed.
Why they are sending me that old data over instead of 2020-2021-2022 I am not sure either. (covid prolly, but still that is the most relevant info).
Combined EBITDA for 2017-2019 was $462,507, with an average EBITDA of $154,169. Multiply that amount x 5 for a business value of $770,845.
When you total the elements of business value ($770,845), real estate and associated value ($1,524,490), and goodwill ($204,665), you see the basis for the asking price of US$2,500,000.
(Real estate looks like a real stretch, as they lease the land for 2K a year.)
I don't know anything about EBITDA yet, or how to read these financials properly. Any tips on how to learn this kind of stuff the fastest? Any book/video/games recommendations?
First thoughts are that this resort is a dud, but tbh I don't have the financial understanding yet to be sure. (as it looks I need to work 25 years just to break even, prolly some more as there will be renovations/boat repairs etc).
Thanks!
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