Value of a gite business for sale

[xy24]

I am going to be selling a successful gite complex I own but I am having real problems valuing the properties and the business.

The following links gave some advice,

http://www.gite-web.com/runninggitesa.html

http://www.frenchentree.com/fe-gitebusiness/DisplayArticle.asp?ID=302

which is basically a 10% return on turnover. E.g. 50,000 turnover gives 500,000 for the gites + market value of house on site.

However I've had meetings with a Notaire, Estate Agents and my Accountant and they all seem to scratch their heads and come up with various different figures. The problem being, it's a business sale and a family home for sale.

I've got years of audited accounts showing turnover, expenses, profit etc, for the SARL that leases the gites from me and pays me rent.

I'm not expecting a price from someone here without figures etc, just anyone who recently sold or bought a gite complex and has any advice or ideas on working out a selling price.

Thanks,

[Benjamin]

Can I just clarify a point? You don't run the gite business you solely rent out the buildings to a SARL that does? In other words you are only the property owner.

If that is the case you may have difficulty in getting a clear answer.

[Chief]

[quote user="Benjamin"]Can I just clarify a point? You don't run the gite business you solely rent out the buildings to a SARL that does? In other words you are only the property owner.

If that is the case you may have difficulty in getting a clear answer.

[/quote]

Not sure that response actually adds anything. But point taken by OP i am sure. :-))

[xy24]

I am the property owner, of all the buildings, the owner of the SARL, and run all the gites as well.

The buildings where all bought by myself, not through an SCI or anything complicated. The SARL was created and received a large investment of my personal money. The SARL then renovated the gites, pays all the expenses running the gites and receives all the income. I do all the work, marketing, paperwork, cleaning, guests etc, the SARL receives all the income and then I get paid as a shareholder + rental from the lease each year.

There is no other third party.

[nimportequoi]

I don't think I would buy a gite business if all I could expect was a 10% return on turnover especially if this didn't include the owners family accommodation! No wonder there are so many for sale. (Speaking as a gite complex owner who gets significantly more ROI than this and wouldn't want to live off anything less!). But if that is the valuation of the experts, then why not go with that to start with?

[xy24]

I suppose that is what I am asking. What is a good ROI, how do you calculate it, on profit, turnover, ? Should the buildings be valued separately from the income stream, or as a whole ?

The 'experts' notes in the websites I listed aren't necessarily experts. It seems very simplistic. Hence the request for general advice.

[nimportequoi]

I remember reading somewhere - possibly a newspaper article a while back on a couple who offered advice to potential gite owners, that the ideal ROI should be in the regoin of 20 - 25% in order to make a decent living out of the business. For me, that would include the accommodation too. However, a business is ultimately worth at someone will pay for it and for a couple, for example, with the money to buy outright, who are looking for a lifestyle change and don't necessarily need to rely on it as their sole income source, would need a lot less ROI and may therefore be prepared to pay more for the right property in the right location.

[andyh4]

ROI is waht it says on the label - that is profit (your return) divided by the investment.

Although I am no gite owner 25% sounds the sort of number that the TV programs dream up in things like a house in the sun.  Maybe that's what you need to make a living based on 1995 investment prices but today I think that would be exceptional.

[nimportequoi]

The OP was talking about ROI being based on the turnover, not the profit, there is a considerable difference. The percentage figures I have been talking about are based on the turnover, not profit of a gite business.

[Benjamin]

Thanks for the reply xy24. I was just trying to assess if there was one issue or two seperate ones to consider.

I'll go away and see if there's anything relevant I can add.

[Miki]

The rule of thumb, some years ago,  for a complex in a good position and with a nice house for the owners to live in was generally around 7-8 times annual turnover plus a figure for the owners house.

Times have moved on and 10 x annual turnover (isn't that just another way of playing with the same figures ?) plus a figure for the owners house would seem reasonable.

The bottom line is quite simply pitching the price at a figure it will find a buyer at, either quickly (lower Estimate) or the figure one thinks it is worth when compared on a like for like basis i.e another similar property sold recently and is comparable with turnover etc, in which case one will value it more and possibly (probably ?) have to wait longer for a buyer.