October 2018 AVC Business Valuation Quick Read

Law - Business Valuation Highlight

• Alabama divorce court adopts result of calculation engagement (Rohling v. Rohling, 2018 Ala. Civ. App. LEXIS 94) - The parties contested the valuation of the husband’s dental lab. The valuation expert worked pursuant to a calculation engagement. The trial court noted that just because a “more arduous or accurate method (valuation engagement) exists does not preclude the Court’s consideration of [the expert’s] findings.” It adopted the expert’s calculated amount.

Industry Highlight: Restaurants

• Demand for US eating and drinking places, including restaurants, is forecast to grow at an annual compounded rate of 4% between 2018 and 2022;

• Food Trucks Gain Popularity - mobile food establishments generate approximately $1 billion in revenues and are among the fastest-growing dining industries in the US, thanks to low overhead, quick service, and the flexibility to adapt to trends;

• During the past 12 months, average sale price for a restaurant establishment in the U.S.(SIC Code: 5812) was $237,000 (rounded) with valuation multiple multiple of 4.7x Price/ EBITDA and 0.36x Price/ Sales.

AVC - Top Business Leaders Survey Results
Based on our survey results, nearly 40% of business owners indicated that they do not have a buy-sell agreement, or a clearly defined succession / exit strategy (Source: Araliya Valuation Consulting Business Leaders Survey 09.15.2018)