Valuation of educational institution
This query is : Resolved
17 November 2011
Dear Sir,
I am a new ca in practice. One of my client who have been reunning his educational institution (MBA/BBA/Computer Cources/School of English/Entrance Coaching etc.) for the last 20 years with handfull of students. It is located in a prime location in the city. He want to sell the institution as such due to his bad health condition.
I was asked to advise him to value his business.
Please pass to me if you have any ideas to value his goodwill. If valued in the traditional way, how many years purchase of superprofit has to be considered for valuation of G/W ?
This is an urgent requirement for him because some people already expressed their interest.
Thanks
vinodaca74@gmail.com
I am a new ca in practice. One of my client who have been reunning his educational institution (MBA/BBA/Computer Cources/School of English/Entrance Coaching etc.) for the last 20 years with handfull of students. It is located in a prime location in the city. He want to sell the institution as such due to his bad health condition.
I was asked to advise him to value his business.
Please pass to me if you have any ideas to value his goodwill. If valued in the traditional way, how many years purchase of superprofit has to be considered for valuation of G/W ?
This is an urgent requirement for him because some people already expressed their interest.
Thanks
vinodaca74@gmail.com
Praveen Bajaj
(Expert)
18 November 2011
Hi Vinod
Educational businesses are very much faculty specific, unless he has set up proper materials and content to teach all the courses he has been conducting. Continuity of the business depends totally on the person who is taking the classes.
Thus, this business, without the main person himself, is not a business and should be valued only on the value of physical assets that he might be looking to sell.
Educational businesses are very much faculty specific, unless he has set up proper materials and content to teach all the courses he has been conducting. Continuity of the business depends totally on the person who is taking the classes.
Thus, this business, without the main person himself, is not a business and should be valued only on the value of physical assets that he might be looking to sell.
Vishal D Shah
(Expert)
19 November 2011
I agree to Pravin. However, it the other faculty is good enough, you may adopt DCF Valuation method too.
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