Your company wants to buy a restaurant group called Gourmet Adventures (represented by a jar of coins). They have three business units that serve different markets that you must value. In addition, you are concerned about competing bidders. You want to buy Gourmet Adventures but only at the right price.

About the Target

Gourmet Adventures consists of three restaurant chains:

• Quarters Fine Dining. Quarters is a chain of upscale steak houses in major cities across the U.S.
• Nickels Family Feast. Nickels is a chain of moderately priced sit down family restaurants
• Pennies Pizza. Pennies is a chain of take out Pizza restaurants primarily serving college campuses.

Valuing the Target

Your first task is to develop a methodology for valuing the target. You have information about the relative profitability of the three restaurant chains and you know the revenue of the firm as a whole. You can use this information to develop a valuation model/methodology.

• The firm (jar) as a whole is 500 milliliters in size (revenue)
• Quarters: 9 milliliters of quarters generates $2.00 of net present value
• Nickels: 12 milliliters of nickels generates 50 of net present value
• Pennies: 20 milliliters of pennies generates 25 of net present value
• Air = Corporate overhead: This is worthless to the new buyer

Develop a Bid

Given your estimated value, what are you willing to bid for the target? Note, if you win the bidding contest and get it at a bargain, I will pay you the difference plus a prize. If you overbid, you will pay the shareholders of Gourmet Adventures (Coff Corp.) the difference.

Describe your valuation methodology:

What is the estimated value of Gourmet Adventures according to your methodology? Note: while I need this information to run the exercise, it will have no bearing on your firms returns so please be honest (only your actual bid counts).

Estimated Value $_________________________________________

What is your bid for Gourmet Adventures?

Actual Bid $_________________________________________