Table of Contents
Executive Summary 3
Opinion of Value 4
Assumptions and Limiting Conditions 5
Business Overview 7
History of company 7
Services provided 8
Self-Service 8
À la carte Menu 10
Catering services 11
Education industry analysis and its impact on canteen business 12
Conclusion 14
Production Process 15
A la carte menu 16
Self-Service 17
Customers analysis 18
Suppliers 19
Human resources 20
Description of facilities 21
Furniture and Fitting 23
Equipment and Machine 24
Financial Analysis 25
Asset Valuation: Book Value Method 25
Market valuation method: The going market rate method 26
Income-based business valuation: Return on investment (ROI) method 27
References 28

Executive Summary
Mr. Bernard, owner of the ABC Food Outlet, is contemplating to sell the canteen at the ABC University. Our Boss approached Mr. Bernard, upon hearing about the upcoming sale of the canteen, with a possible offer to buy the canteen. Mr. Bernard offered to sell the canteen for the price of RM500, 000. However, since he is not sure about whether the canteen is a good buy at the price of RM500,000 , the boss asked out team to carry out valuation of business and to hand him and business valuation report for the canteen at ABC University.

In this report, valuation of business for the ABC Food Outlet will be carried out. The ABC Food Outlet is located on the campus of ABC University and has been in business at the ABC University for the past 15 years.

The aim of this report is to analyze the trends of Education Industry and its impact on the canteen business. This will provide clarity as to the future of ABC Food Outlet according to the prospects of the ABC University. Moreover, the service provided to their customers and the production process will be described meticulously. Next, the customer analysis is performed so as to acquired perfect understand of whom the ABC Food Outlet serves and how it influences the business of the enterprise. Additionally, the suppliers and the human resources of the canteen is described as well as the layout of the canteen is explicitly detailed for better understanding. Lastly, the financial analysis of ABC Food Outlet is conducted so as to find out the real value of business.

Opinion of Value
Firstly, based on the Return of Investment analysis, the selling price of the business should be of RM400, 000, if the desired ROI value of 15% can be reached. This makes the business RM100, 000 overpriced.
Secondly, based on the financial analysis performed, it is of fair opinion that we can say that the business desired to be bought is of fair value. The market price ranges from RM400, 000 to RM666, 600; hence the price offered for the business, i.e. RM500, 000 is a fair enough price.
Thirdly, based on the analysis conducted regarding the education industry and the impact that it will have on the canteen business, it is fair state the canteen will be a thriving business in the years to come. As the number of student increase year by year, the number of students joining the university will bring more customers to the business; hence making it a successful one.
Fourthly, based on the human resource analysis, it can be seen that the staff is lacking, even if Mr. Bernard stated otherwise. For the number of hours operating and the number of clients they are currently serving, 10 employees is not sufficient for a smooth-running business. If the canteen is purchased, more employees should be recruited for a smoother business-running.
Finally, it can be said that the business is a profitable one and with proper management it will lead to be a prosperous one. Though, the price could be debated with Mr. Bernard to find a middle ground so as both can obtain a fair price. Assumptions and Limiting Conditions
This business analysis is subject to the following assumptions and limiting conditions: 1. All information pertinent to this analysis, such as estimates and opinions, have been acquired from sources considered reliable. However, the information has not been verified and therefore, the team assumes not liability for such sources;

2. All facts and data presented in this report are true and accurate to the best of our knowledge and belief. No information has been deliberately withheld or omitted from the report that might have any influence of out opinions, conclusions, recommendations or estimate of value;

3. No investigation of titles to the property or any claims concerning ownership of property by any individual or company has been undertaken;

4. The estimates of value presented in this report is applicable to this analysis only and many not be used out of context presented herein;

5. It should be particularly noted that this analysis assumes the business will be entirely managed and maintained by financially sound owners over the expected period of ownership;

6. No opinion is intended to be expressed for matters which require legal, income tax or other specialized expertise, investigation or knowledge;

7. It is assumed that there were no regulations of any government entity, which controlled or restricted the use of the underlying assets, unless specifically referred to in this report. It was also assumed that underlying assets were not operated in violation of any applicable government regulations, codes, ordinances or statutes;

8. This report contains prospective financial information, estimates or opinions, which represent our view about reasonable expectations at a particular point in time. Such information, estimates or opinions have not been offered as predications or as assurances that a particular level of income or profit will be achieved or that specific events will occur;

9. We have assumed that there were no hidden or unexpected business conditions which would adversely affect the opinions, comments, observations, recommendations and conclusions expressed herein; and

10. Hazardous substances, if present, can introduce an actual or potential liability, which will adversely affect the marketability and value of a business. Such liability may be in the form of immediate recognition of existing hazardous conditions or future liability, which could stem from release of currently non-hazardous contaminants. In the development of our opinions, comments, observations, recommendations and conclusions no consideration has been given to such liability or its impact. We have not taken into account any and all future environmental considerations and associated potential liability

Business Overview
History of company
ABC University is a private University established at in the mid-1997. It offers a variety of diploma, undergraduate and postgraduate programs, both part-time and full-time. On average, a course last for 3-4 years. Currently, there are 10,000 students with a total of 250 staffs, whereby 130 are lecturers and the others are Technical Assistants and Office Administrators. The student body consists of both local and international students, origination from the continent of Africa, the Middle East and so on.

ABC Food Outlet is the canteen services ran by Mr. Bernard. Situated on the campus of ABC University, the canteen caters principally for the students and the staffs of the University; they serve lunch and breakfast. Having been established nearly at the same time as the University, ABC Food Outlet has been the food outlet for the students for the past 15 years. Since, the canteen offers its services principally to students; the price ranges are very affordable.
Services provided
ABC Food Outlet serves breakfast and lunch for the students and employees of the ABC University. It serves both self-service food and À la carte Menus. In self-service, the customers get to choose from a variety of food displayed on the food rack, while in À la carte mode, the customer places an order from a menu carte provided. Moreover, the canteen also offers catering services for the events that are held at the university. Breakfast is provided from 07 00 to 11 30 and lunch is 11 30 to 19 30.
Self-Service
Breakfast Menu
Menu Item Price(RM) Menu Item Price(RM)
Pain Perdue 1.00 Toasts 0.70
Sunny Side-Up Egg 1.50 Baked Beans 2.00
Sausage 1.70 Bread and Nutella 1.50
Pancakes 1.00 Wild Rice Salad 3.00
Stuffed Omelet 2.00 Oatmeal Porridge 4.00
Fruit and Yoghurt 2.50 Muffins 3.00
Doughnuts 2.50 Cheesecake 7.00

Lunch Menu
Menu Item Price(RM) Menu Item Price(RM)
Chicken Curry 3.00 Fish Curry 3.50
Lamb Curry 4.00 Steamed Vegetable 2.50
Sautéed Rice 2.00 Sweet and Sour Fish 4.00
Ginger Chicken 4.00 Fried Chicken 2.00
Fried Fish 2.00 Dhal 1.00
Baked Beans 2.00 Salad 2.00
Chicken Nuggets 1.00 Chicken Burger 2.00
White Rice 1.50 Yellow Rice 2.00 À la carte Menu
Breakfast Menu
Menu Item Price(RM)
The Vegetarian – Scrambled eggs topped with Cheddar cheese, green onions and diced vine-ripe tomato, wrapped in tortilla. 7.00
The Grande – Scrambled eggs and sausages topped with Cheddar cheese, green onions and diced vine-ripe tomato, wrapped in tortilla. 9.00
The Spicy Grande – Scrambled eggs, chorizo sausage and tangy jalapenos topped with Cheddar cheese, green onions and diced vine-ripe tomato, wrapped in tortilla. 10.00
Breakfast Panini – Freshly scrambled eggs topped with Cheddar cheese and chopped hickory grilled in grilled Panini Bread 6.00
Spicy Breakfast Panini - Freshly scrambled eggs topped with Cheddar cheese and chopped hickory, tomatoes and spicy jalapenos grilled in grilled Panini Bread. 7.00
Egg & Cheese Croissant – Scrambled Eggs topped with cheese on a warm buttery croissant 6.00
Chocolate Croissant – Chocolate Stuffed Croissant 5.00
Grilled Cheese Sandwich – Grilled Cheese on toasted bread 4.00

Lunch Menu
Menu Item Price(RM) Menu Item Price(RM)
Chicken Chop 7.00 Chicken Fried Rice 5.00
Fish and Chips 8.00 Seafood Fried Rice 5.00
Shrimps and Chips 10.00 Chicken Fried Noodles 5.00
Meatball Marinara Sandwich 7.00 Seafood Fried Noodles 5.00
Bolognese Spaghetti 7.00 Grilled Chicken Burger 3.00
Garlic and Cheese Macaroni 7.00 Grilled Beef Burger 3.00
Seafood Pasta 7.00 French Fries 5.00

Beverages
Menu Item Price(RM) Menu Item Price(RM)
Hot Milo 2.00 Iced Milo 2.00
Hot Horlicks 2.00 Ice Horlicks 2.00
Black Coffee 2.00 Iced Black Coffee 2.00
White Coffee 2.00 Iced White Coffee 2.00
Mocha 2.00 Iced Mocha 2.00
Cappuccino 7.00 Iced Cappuccino 7.00
Mochaccino 7.00 Iced Mochaccino 2.00
Orange Juice 5.00 Apple Juice 5.00
Watermelon Juice 5.00 Honeydew Juice 5.00
Pineapple Juice 5.00 Lemon Mint Juice 5.00

Catering services
When catering for University events, Mr. Bernard takes the orders from the event organizer; he shows them their menus, and jot down the desired item and the quantity required. The menu that are provided are both from breakfast and lunch and from both self-service menus and À la carte menus.
Education industry analysis and its impact on canteen business
The Education Industry is sky-rocketing in Malaysia. The Higher Education Ministry is expecting 120,000 foreign students in Malaysia by the year 2015 (The Malaysian Insider, 2010) and 200,000 by the year 2020. (Berryberryeasy.com, 2011). The number of international student is increasing every year in Malaysia. Below is a chart showing the number of international students enrolled in Malaysian universities over a period of 15 years. Figure: International Student Trend
Source: http://www.mepc.com.my/mal.htm

To be a fully developed nation, the government has targeted that a minimal of 21 percent of Malaysian students should receive college education. Moreover, due to the recent economic crises which led to a drastic depreciation of the Malaysian Ringgit, enrolment in both local and international universities have increased by leaps and bounds. This is due to the fact that government sponsors managed to strike deals for cheaper tuition fees for their students. Malaysia who wanted to have the foreign experience and attend oversees universities had to came to terms with reality. Face to the depreciation of the ringgit, the students had to enrolled in both privates and public universities in Malaysia itself (Yaakub, N. and Ayob, A., n.d.).
The Ministry of Higher Education’s incentive to enroll more students in universities positively impacts ABC University too. As of this date, ABC University counts 10,000 students. 5 years back, the number of student was around half of what it is now. The chart below provides a graphical explanation of the trend of ABC University in term of students.

Figure: Number of Students enrolled in ABC University

End of 2012 and beginning of 2013, more students joined the university making the hand count coming to an exact number of 10,000. If the trend continues as such, the number of students enrolling in ABC University will be even more in the coming years.

The increasing trend in the education industry demonstrates that there is an ever-increasing number of students, thus making an ever-increasing number of customer for the canteen business. Moreover, having huge numbers of international students gives an edge to the canteen business, since international students barely eats at home and mostly relies on canteen, cafeterias and fast-food outlets for convenience’s sake.

Conclusion
ABC Food Outlet depends on the number of students to prosper. The more the number of students, the more profitable the business. The explanation provided above demonstrates that the number of student will be increasing, both in general and for ABC University. The increasing number of student implies that the business of ABC Food Outlet will keep on being thriving and will prosper.

Production Process
There are 2 types of services offered by the ABC Food Outlet; the A la Carte Menu and the Self-Service Menu.

While it is breakfast hour, i.e. from 07 00 to 11 30, the breakfast menu is placed on the serving racks for the self-service items, and the only the breakfast a la carte menu is available for orders. As soon as it reaches lunch time, all that remains from the breakfast self-service racks is disposed of, and the lunch items is then placed on the display racks. The a la carte menus for breakfast also become unavailable at 11 30 and the lunch a la carte menu becomes available. For beverages, the a la carte menu is available all throughout the day.

For the duration of breakfast and lunch hours, while customers are having lunch and breakfast, the cleaning persons disposes of the used cutlery and crockery.

Another person is in charge of washing the dishes as soon as the waiter/waitress drops the used wares in the kitchen.

After preparing the dishes for the self-service lunch and breakfast, the cooks remain on standby for the a la carte menus processes.

At the end of the day, the owner, Mr. Bernard, balances the money acquired during the day.

Below the explanation of the 2 services offered followed by flowcharts of the processes is provided.

A la carte menu
For the a la carte menu, the process begins when a student request for an a la carte menu. The cashier hands the customer the menu carte and the student picks the food item desired. The student then proceeds to make the payment and is handed a Number Ticket that the customer will take to his/her table and place it in such a way that it can be seen. The waiter/cashier informs the cook of the order and the cook proceeds to prepare the dish. When the food is ready, the cook informs a waiter or waitress and he/she will proceed to find the customer with the matching ticket number and will deliver the food. The process is similar for a la carte drinks, such as coffee and fresh juices.

Figure: Flowchart for the A la carte process Self-Service
The self-service process begins by the Cooks prepare the menus that will be served buffet-style. The food is then placed in containers on serving racks. The customers then picks up plates and choose from the variety of food displayed, and proceed to the cashier to make the payment for the food they purchase. The same applies for drinks, the customer proceeds to pick up a drink from the refrigerator and proceed to the cashier for payment.

Figure: Flowchart for the Self-Service Process Customers analysis
The canteen services the students of ABC University as well as the staff. Since no other canteen or fast-food outlet can be found in a radius of 3Km from the university, most, if not all, of the students have lunch and breakfast at the canteen. The customers of the Canteen are principally the students and the staffs of the university. There are currently 10,000 students and 250 members of the staff,

Figure: ABC Food Outlet Customer Graphical Representation

On all the days that there are classes at the University, the Canteen is open, which most commonly is from Monday to Saturday. Moreover, when there are events at the University and food is to be served, the Canteen caters for the event and the administration settles the fees.
Suppliers
There are around 15 potential product suppliers to the Canteen business of which they deal with around 10 of them at any time. Mr. Bernard places order for any item required according to the needs of the moment. The quantity varies according to the amount of that item in stock and/or the quantity required. The good to be supplied ranges from vegetables, meats and any other ingredient required for cooking to bottled and canned drinks to utensils or equipments. The payment method varies from supplier to supplier. Below is a detailed list of the suppliers, the goods they supply, and the frequency with which they supply.

Supplier Product Quantity Frequency of Delivery Payment
Fresh Greens Co. Fruits and Vegetables 50 Kg Once a week Upon Delivery
MY Beverages Beverages 25,000 cans Twice a Month Monthly
Asif Cold Storage Chicken, Meat and Seafood 200 Kg Once a Month Monthly
Golden Grains Rice 1000 Kg Once a Month Monthly
Chinese Wok Noodles 500Kg Once a Month Monthly
Sunflower Co. Cooking Oil 100L Once a Month Monthly
Ble D’or Flour 5Kg Once a Month Monthly
Tat’s Bakery Bread 10 Packets Daily Monthly
Dairy Vale Dairy Products 50 Kg Twice a Week Monthly
Shell Gas Gas 15 Cylinders Twice a Month Monthly
Flavors Spices & Condiments 50 Containers Monthly Monthly
School Catering Kitchen Equipment As required When Required Upon Delivery
Kitchenette Co. Kitchen Utensils As required When Required Upon Delivery

Human resources
Currently, there are a total of 10 people working under Mr. Bernard. There are 3 persons in charge of cleaning tables, 3 persons to wash the dishes, 1 person working as cashier, and 3 persons working as cooks. If additional help is required to clean tables or to assist the cooks, the cashier helps out while Mr. Bernard takes over the cashier’s work. In general, Mr. Bernard oversees the overall performance and ensures that everything is running smoothly. Also, he is the one to deal with the suppliers and balance the cash made during the day.
It rarely happens but in case that more staffs are required such as in case of catering for university events, temporary staffs are hired. Usually the temporary staffs that are employed are waiters/waitresses, dish washer and cleaner. At present, there is one Temporary Employment Agency from which Mr. Bernard employs temporary staffs.
Mr. Bernard pointed out that the current number of staffs is adequate for the workload of the canteen business. At this point, Mr. Bernard does not foresee employing more staff, as the business is rather constant. However, if the numbers of students increase, more staffs will have to be employed.
Description of facilities
The whole canteen covers an approximation of 300 square meters and is a two storey building. On the first floor, the kitchen occupies and approximation of 40 square meters and the rest of the cafeteria an approximation of 260 square meters. And on the second floor, is just plain 300 square meters of seating area. On the ground floor, the food display rack and beverages refrigerators are placed annexed to the kitchen. The cashiers are found next to the food display racks. The racks and cashier regions are quite spacious so as to avoid crowding. The whole cafeteria is air-conditioned for the comfort of the customers. Wash basins are placed at strategic locations to provide customers with a washing area so as to maintain their hygienic habits. Below is the layout of the canteen. Figure: Layout of first floor

Figure: Layout of the second floor
Furniture and Fitting
The furniture currently in use at the ABC Food Outlet is around 5 years old. And they are in still good condition. 5 Years of wear and tear is not much when it comes to furniture; in general furniture last for long. The next owner of the ABC Fast Food Outlet will not require buying furniture for at least another 5 years.
Below is a list of the furniture posses by ABC Food Outlet.
Furniture Quantity
Tables 65
Chairs 260
Counters 2
Display Racks 2
Wash Basins 6
Kitchen Sinks 2

Equipment and Machine
ABC Food Outlet’s equipments are 5 years old just as the furniture. Most of the equipment are restoration-specific and have long life-spans. The next owner of the ABC Food outlet will not require buying new equipment anytime soon.

Below is a list of all the equipment possessed by ABC Food Outlet.
Equipment Quantity
Cookware and Baking Tray 70
Kitchen Utensils 100
Racking Shelves 2
Display Fridges and Freezers 6
Gas Electric Cooking Machines 4
Toasters 2
Kettles, Boilers & Coffee machines 4
Dishwashers 3
Cash Register 2
Air Conditioner 8

Financial Analysis
Asset Valuation: Book Value Method
Assuming the depreciation rate per year is of 10 %, below is the calculation of the Book Value to this current date.

Total Tangible Assets (RM) 300000
Total Liability (RM) 0
Depreciation Rate per Year 10%
Number of Years Elapsed 5 2009 2010 2011 2012 2013
Book Value (RM) 270000 243000 218700 196830 177147 Current Book Value (RM) 177147 Market valuation method: The going market rate method
Below is the tabulated data of the ongoing market rate of the past on year.

Company Number of Customer Transacted selling price Price per Customer
Paradise Cafe at Smart High School 3,000 RM150,000 RM 50
Moon Cafe at Twain University 15,000 RM600,000 RM 40
Wan Cafe at Pan Corporation 6,000 RM400,000 RM 66.66

Market Valuation Price per Customer(RM) No. of Student in ABC Uni. Market Value of ABCFO
Paradise Cafe at Smart High School 50 10,000 500000
Moon Cafe at Twain University 40 10,000 400,000
Wan Cafe at Pan Corporation 66.66 10,000 666600
Note: ABCFO – ABC Food Outlet

Hence, according to the Market Valuation, the Market price is ranged from RM400, 000 to RM666, 600.

Income-based business valuation: Return on investment (ROI) method
Formula for income based business valuation:
Selling Price = net annual profit * (100/ROI)
ROI = (Net Profit/Total Investment) * 100
Desired ROI = 15%
Year Turnover Net Profit ROI value IBBV
2007 RM300,000 RM 60,000 15% 400,000
2008 RM350,000 RM 63,000 15% 420,000
2009 RM400,000 RM60,000 15% 400,000
2010 RM450,000 RM67,500 15% 450,000
2011 RM500,000 RM 60,000 15% 400,000

Based on the ROI calculations, the selling price of the business should be RM400, 000 which makes the actual selling price overpriced by RM100, 00. References
Berryberryeasy.com (2011) International Students in Malaysia 2011. [online] Available at: http://berryberryeasy.com/2011/08/malaysia-international-students-2011/ [Accessed: 5 Mar 2013].

Mepc.com.my (n.d.) Malaysian Education Promotion Council. [online] Available at: http://www.mepc.com.my/mal.htm [Accessed: 5 Mar 2013].

Schoolcateringequipment.co.uk (2012) School Catering Equipment - Catering Equipment for Schools. [online] Available at: http://www.schoolcateringequipment.co.uk/ [Accessed: 2 Mar 2013].

The Malaysian Insider (2010) Malaysia - Ministry targets 120,000 foreign students by 2015 @ Tue May 11 2010. [online] Available at: http://www.themalaysianinsider.com/malaysia/article/ministry-targets-120000-foreign-students-by-2015 [Accessed: 5 Mar 2013].

Yaakub, N. and Ayob, A. (n.d.) Higher Education and Socioeconomic Development in Malaysia: A Human Resource Development Perspective. [online] Available at: http://mahdzan.com/papers/hkpaper99/04.asp [Accessed: 5 Mar 2013].