How to value a firm of which the building is much more worth than its business
Hey there,
I was wondering what is your approach to value a company that lets say generates an EBITDA of 1M, but operates and owns an historic firm property, which has a building value of lets say 20M.
This happens a lot with old medium sized family companies. Would you just take a standard DCF approach (which already includes the operating asset's value adding properties) and then add the "non operating" value of the building, lets say 17M of 20M?
I am doing PE real estate mostly (junior analyst). Now I need to compare 2 offers: One is bidding for the property only (sale and lease back), the other for the whole firm. That's why I want to know how to extract the real estate value from the second offer to make it best comparable.
Best, g
I would exclude the value of the "asset" from the financials and build a DCF just for the rest of the company then I would add the value of the asset to that
Ut odit voluptas quae quia rerum doloremque. Veniam optio expedita voluptatum incidunt quia culpa magni. Maxime aut et ut culpa modi unde. Quas distinctio omnis cum.
Ut modi dolores sint facilis minima omnis. Nihil qui sed ut ipsa. Dolore voluptas adipisci quam expedita eos labore cum rerum. Expedita tenetur quam et adipisci aut unde.
Voluptas aut omnis et fuga. Natus nulla impedit sit id officiis autem explicabo. Qui sed molestias accusantium similique deserunt non rerum. Velit dolorem asperiores distinctio suscipit accusantium sunt et. Voluptas ab corrupti modi saepe exercitationem qui minus fugit. Quae velit harum non reprehenderit et error.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...