The growths of the international students are significantly increased every year in Malaysia which brings much business opportunity associated with Malaysia’s education industry.
Mr Bernard, the owner of Bcafe is contemplating a sale of the canteen at ABC University at RM 500,000 as he plans to migrate to Australia. The canteen operated for 15 years which serves breakfast and lunch at reasonable prices for 10,000 students nowadays. Moreover, there is no other competitor within 3KM which shows a great competitive advantage. It looks likely a good/worth deal on the surface but no one can assure that. Therefore, the business overview of Bcafe, the canteen in ABC University will be evaluated in this business valuation report. Moreover, asset valuation, market valuation and income-based business valuation will be covered in the financial analysis part in this report to further examine the real value of Bcafe.
Opinion of Value
Based on the review of the information provided, I’m of the opinion a reasonable range of value for Bcafe, as of 31 January 2012:
RM 400,000 to RM 500,000
The most valuable selling price
The reasonable selling price
The maximum selling price
Among the three techniques applied, income-based business valuation (ROI method) has been chosen as the best approach to estimate the selling price of Bcafe as ROI method can predict the business’s ability to produce income in the future. The buyer is able to predict the periods required to get back the return on investment. As the findings from ROI method at RM 400,000 is not far from the offered price at RM 500,000 thus the buyer can consider this deal seriously. Moreover, research in education industry analysis in this report showed huge potential of growth in Malaysia’s education industry as the numbers of international students are increasing every year which
References: 1) Etawau (2013), “Higher Education In Malaysia” [Online] Available at: http://www.etawau.com/edu/IndexUniversityPrivate.htm [Assessed on 26 April 2013] 2) Priyanka Naithani & Swasti Chatterjee (2012), “Students no longer prefer college canteens” [Online] Available at: http://articles.timesofindia.indiatimes.com/2012-06-27/people/32425908_1_cafes-canteen-college-premises [Assessed on 24 April 2013] 3) Prof. Alan R. Palmiter (2005), “Chapter 5 – Business Valuation” [Online] Available at: http://users.wfu.edu/palmitar/Law&Valuation/chapter%205/5-0-0.htm [Assessed on 6 May 2013] 4) PTPTN (n.d.), “Portal Rasmi/Official Portal: Perbadanan Tabung Pendidikan Tinggi Nasional” [Online] Available at: http://www.ptptn.gov.my/web/english/corporate/vision [Assessed on 26 April 2013]