Location: Murrieta, CA
The attached spreadsheet model is for the Golf Club at Rancho California golf course located in Murrieta, CA. The currently listed sales price is $5,000,000. This model includes a pro forma income statement and balance sheet for the golf course based on market assumptions in the area. It also includes an analysis of the costs of capital and internal rate of return forecasted for the golf course, plus a high and low market cash flows projection with an optional capital expansion in the high market. The model allows variables to be changed for all major inputs of the computations (such as prices and quantities of products sold), and includes citations for assumed values in the models.
In the model with the input values chosen, the golf course would have a weighted average cost of capital equal and internal rate of return of 6.95%, but this was accomplished using a 65% debt proportion and a purchase price of the assets at $4,325,000. For this reason, we believe the listed sales price for the golf course is not a reasonable amount. We believe that a purchase price of around $4,6000,000 would be much more accurate given the current market conditions. This would allow some fluctuation in the business as it operates. Given the assumption that we have made along with the possible refurbish option, we would recommend purchasing this company if the sellers are willing to lower the purchase price.