ENTR 3060 Financing New Ventures Tu nkey Valuation, Lodging There are several advantages of buying a successful existing business, from convenience to a quicker (and safer) return on investment. Knowing the benefits of this business strategy may well tempt the aspiring entrepreneur. Already established business gives lenders assurance and can persuade them to offer financing options with more favorable terms. The proper valuation o... going concern. There are limited tools to perform the valuation a combination of the following can be used: 250% of annual sales plus inventory 8 times sellers discretionary carnings SDE 8 to 10 times EBIDA (earnings before income tax depreciation and amortization) 2 to 3.5 times annual room revenue Outside corridor 2 to 2.5 times annual room revenue Inside corridor 2 to 3 times annual room revenue I Intangible factors include: reputation, location, history, character etc Outlier factors include: real estate valuc, improvements, location cither beach or slope side. Four Seasons Inn. Substantial existing property with 16 guest rooms. ADR S120, with annual revenue of $550,000 there of $215,000 restaurant (rule of thumb 40% of food revenue) Essentially S335,000 rooms S215,000 F&B Exclusively listed at $1,395,000. Wonderful 3 bedroom owner's quarters with private entrance. What is it worth