CASE ON..

“THE
CANTEEN”

BY: Priyanka .R
Nayshad Sayed
Prasad Kumar
Nushaiher Nisam
 About the case..
“The Canteen” is a local franchised restaurant pub having 5
area location.

Owned and operated by Thor Holdings LLC, a local

company owning several franchisees of restaurants, ice
cream shops and coffee houses.

Out of the 5 locations, 2 locations are running at loss

because of trouble in maintaining the staff and managers
who are not able to carry the business successfully and the
huge costs (rent) as well.
But, Mark and Diane Jones, employees of the other profit
making locations of Canteen disagreed with the plan of
selling the two locations.

They convince the management saying within a year they

will increase the profits and would want to buy the locations.

The management agrees to the plan and mutually get in to an

agreement at a price of $1,000,000.

But still, Mark and Diane plan to go for valuation of the

business
Need for valuation

 Identifying the fair market value of the firm.

 Business Sale or Acquisition.

 For the sellers’.

 For the buyer’s.

 Legal purposes.

 Obtain financing.

 Expansion of the firm.

 Separation of business and ownership.

BENEFITS OF
VALUATION
 To determine whether the amount the seller requires the buyer to pay is worth.

 Helps in selecting the right location.

 Helps in determining the fair market value of the firm.

 Helps is raising finance and loans through banks.

 To identify, if Mark’s and Diane’s plan of increasing the sale is practically

possible.

 To determine the future expected growth of the business as compared to

current and historic rates.
 Helps in securing the required amount of finance in order to
acquire the business.

 Determine the objective value of the firm rather than getting the
valuation done just to get the deal fixed.

 Determine the true value of the assets.

 Communicates even the most complex valuation issues in a

clear and concise manner

 Identifies the potential opportunities and risks associated with a

transaction and a company's overall strategy
CRITERIA FOR VALUATION
 Local traffic not sufficient in order to increase the sales.
 $1,000,000 which was mutually agreed between the management
and Mark & Diane, was to be reassessed through valuation.
 Mark & Diane have come up with lots of plans in order to
increase the sales, so through valuation they want to identify
which plan would be practically implacable.
 The amount of money to be invested in advertising and also to
identify the type of media to be selected in order to increase the
sales.
 The type of training programs to be introduced and the inventory
management techniques to be implemented in order to reduce
cost of sales and increase savings.
 Income and market approach adopted in order to determine the
final value by the analyst.