Is the valuation of a pub worked out differently between a lease and a freehouse?
The method of valuation is exactly the same for a tied lease or free-of-tie lease as it is for a freehold. The difference being the property, or bricks and mortar, element will not be taken into consideration with leasehold businesses and the multiplier applied to the profit to determine value will vary between these different forms of tenure. A valuation will take account of the goodwill, trade fixtures and fittings, and the freehold property if applicable. It was mentioned that my valuation is based on a multiple of reconstituted profit. What does that mean? The reconstituted net profit otherwise known as the adjusted net profit is the figure the valuer arrives at by adding back to the net profit shown on the profit and loss account overheads which are not operationally specific such as depreciation or are peculiar to how you operate or have financed the business. These would be overheads which would not be incurred by owner-operators working in the business full time and it would be
