Leasehold businesses: a multiple of earnings
Most operator businesses are priced as a multiple of adjusted earnings (EBITDA, after a fair wage for the owner if they work in the business). The multiple moves with risk and quality:
- Higher: strong fuel volume, growing shop sales, long secure lease, favourable supply terms, modern equipment, easy-to-run staffing
- Lower: short or uncertain lease, supply agreement near expiry, declining volumes, heavy owner involvement, ageing tanks or equipment
Stock is usually added on top at valuation (SAV).
Freehold investments: income and yield
Investment value is roughly net income divided by the yield buyers will accept. A site earning $400,000 net at a 6% yield implies about $6.7 million. Yields tighten (prices rise) for strong tenants, long leases and good locations.
Freehold going concerns
These combine both: the property at market value and the business on an earnings basis. Sometimes a notional rent is deducted from the business's profit to avoid double counting.
Our estimator gives an indicative range only. For a sale, get a broker's appraisal or a formal valuation.
Estimate your servo's value
An indicative range in two minutes.