Cameron Prosser was recently interviewed by Dennis Hosking from FITREC to talk about selling fitness businesses during the COVID climate.
D: How do you come up with a valuation at times like this, surely there is so much uncertaintly?
C: The old saying is always... what’s something worth? well what someone is willing to pay for it. However we do try to systemise it, we try to make things obviously really simple for people to get a fair and reasonable price estimate. We always use a multiple of their EBITDA or PBITDA . Which is an accounting phrase with what your expenses and obviously your top line is. But again, we are also doing things that are trying to take into consideration COVID... Is that taking away 6 months of trading or 3 months of trading... reducing your multiple of your EBITDA or PBITDA is that doing an estimate of market worth based on your asset value. Look, there’s alot of different ways we’re trying to ensure we do a reasonable valuation for clients before putting the business to market. I know the Australian Institute of Business Brokers that we’re strong advocates for and part of, we’ve had multiple discussions in the industry nationally on this sort of stuff. How to value, in these times.
D: When someone is selling a business, have you ever bundled in the online component and how that may influence the sale price?
C: Absolutely, I’ve done both Dennis. We’ve had a gym where you have the freehold and the assets and membership base. Where there is a standard 24/7 gym model. That we’ve sold. Part of that was the social media, online classes, intangible things you cant really touch that have actually helped to generate alot of value in the freehold thats been transferred across. It might have only have been 20% of revenue generated online. But, it was certaintly a large amount to be transferred and was important for the incoming purchaser to get ahold of that....