Hi there, how do you normally approach valuing a business where real estate is a component of it?
I'm currently approaching it by finding what the business is "paying" for the real estate (through a lease to the LLC that owns the land which is owned by the same) , then using that amount as a perpetuity and a target interest rate to figure out the value to assign to the land. I then take that value and add it to what I'm valuing the business at (with an EBITDA multiple)
Is that on the right track or should I be looking at it in a different way?
Valuing a deal with real estate included in it
by a searcher from Purdue University
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Be cautious in contacting brokers for BOVs for two reasons.
1 - you'll be tipping them off that there's potential opportunity and they may start contacting the property owner directly with other offers
2 - Need to research which brokers really know that market and product type. Having been in brokerage, 90% of brokers are goofballs and have only had recent success because the market has been hot for so long. The good ones will shoot you straight and be genuinely helpful, just takes a little work to find them.
Happy to help, send me a DM if you'd like to chat more.