In this country EBITDA is kinda of meaningless as you point out but for those that don't understand the business environment in Cambodia it's a good place to start. Yes it's often criticised but so is every other method but atleast it's based on on cash flow and not something like total sales. As there haven't been sales of any similar business it's hard to get a market value that way.Miguelito wrote:Hmm. Well EBITDA means "earnings before interest, taxes, depreciation and amortization," and is a rather criticized valuation method due to the fact that it is easily manipulated. But anyways, presuming the bar doesn't have any outstanding debt at the moment (so no interest), and I don't know what can reasonably be depreciated (the ice machine?) or amortized, in this situation it's pretty much the profit (minus operating costs), but before taxes (so, EBT)? Why not just stick to net profit here? And then to value the business, you take this number (which isn't even an approved GAPP measuring device) and multiply it by five... despite the fact that the lease is up in ten years, and then what?dv8inpp wrote:Valuation of the business was done by using the EBITDA formula with a multiplier of 5 due to no debt and secure lease (future cash flow)
I'm sure KPMG or another firm has provided auditing services, right?
The business is ideally suited to an owner operator situation but still big enough to employ a business manager and make a profit.