Valuations & Due Diligence

In order for any franchisee or business owner to make financial decisions about their business, they must first know the value of their business. Should I sell? Should I develop new stores? Should I buy new markets? Is my business healthy or in trouble? What are my business’ strengths and where can it improve? Do I need better financing? Does a sales-leaseback of my real estate make sense? Is my senior debt in compliance with my lender requirements? What is the best financial strategy going forward? Without an extensive, detailed valuation, no franchisee can reliably move forward. Knowing your business in detail in today’s ever-changing financial environment of franchise restaurants is not a luxury, it is a necessity. Accordingly, MarshallMorgan provides its’ clients with a wide array of decision-making tools in each of its valuations.

The information and analysis provided in MarshallMorgan’s Valuation Memorandum can be used by franchisees as a due diligence book providing potential buyer’s all the information they need to make a decision and also validates the purchase price or refinancing options to potential and existing lenders. This Memorandum will also give a franchisee all the financial options and analysis needed to determine what are the best strategies to implement for the coming year.

In each Memorandum, MarshallMorgan provides:

  • Executive Summary – detailing the background and structure of the business
  • Range of Valuations – scenarios of Minimal, Average and Aggressive valuations and the methodology(s) on how they were determined. The valuation will also divide out the real estate from the business to determine where the most value can be derived for its clients.
  • Detailed Company Financials – analyzing data derived from each store’s profit & loss statements including sales trends, costs of goods, overhead, EBITDA, etc.
  • Graphics for quick over-view of the company’s business and real estate assets including multiples and cap rates ranges on a per store basis.
  • Financial Overview of the Business and a comparison of how the business is performing vs. the national Brand performance. These comparisons will allow the franchisee to see how the business is stacks up against the national trends for sales, profit margins, controllables, rent rates, cost of labor, corporate EBITDA, EBITDAR margins, etc. This analysis will graphically depict the relative strengths and weaknesses of the business.
  • Store by Store Valuations – including individual pages depicting a picture of each store, graphics showing a individual store valuation, capex requirements, a financial summary, net sales trends over the previous 3 years with a one year projection and a graph depicting store EBITDA and percentage margins.
  • Store by Store Income Statements – excel spreadsheets including all P&L information for each store owned by the client.
  • Demographic Reports – including individualized store maps and locations, population density and traffic counts, demographic make-up and income reports, graphic breakdown of ethnic, age and growth forecasts.
  • Map and List of Competitors – from a 1-3 mile radius, including brand name and addresses.
  • Franchisor Report – includes a professional analysis of the performance of the brand nationally including Marketing & Menu Strategy, Market Cap Valuation of the franchisor, stock performance, S&P debt rating, ad spending, franchisor system statistical summary (includes system-wide sales over a 5 year period, same store sales, unit counts, gross new unit development, transfers & closure rates), Competitor comparisons, sales performance vs. the national market segment, market share, operational overview, etc.

Additionally, MarshallMorgan has the resources to tailor any report to address the information and financial needs of each individual client. Accordingly, the above is just a sample of the information that can be provided.