Location: Tallahassee, FL
In our observation of Tallahassee Indoor Shooting Range in Florida, we analyzed the possible financial situations that they may experience throughout a ten year period. The company is currently listed for sale at $2,250,000.00 on bizbuysell.com. We created a spreadsheet that includes a pro forma income statement and balance sheet, based on market assumptions in the area, and an analysis of the costs of capital and internal rate of return forecasted for the business. These spreadsheets can be modified in all variable inputs to allow for more accurate or hypothetical situations.
As for the current models, the inputs have been valued to have a weighted average cost of capital equal to 7.7%, which led to an internal rate of return equal to 8.9%. Attempts to have a higher IRR caused us to assume that the company would have a large debt added to the business and/or that the business would be able to take in a largely unreal amount of revenue. We tried to make the business seem more realistic as far as sales, revenues, and costs.
We have also added an option of a tactical outdoor range/course for the business. This was calculated into an option tree to show the possibilities that could occur for the business if it was considered and whether or not it would be included. With the option we have also included a spreadsheet to showcase the possibility of bankruptcy and the predictions of how the business would handle its assets and debts during such an occurrence. The business we viewed had a 95% survival rate, with only a 5% chance of ever going into bankruptcy.
We believe that this business should modify their asking price to $2,000,000.00. We feel that the current asking price is a little high for the projected cash flows and forecasted revenues. This business has a lot of potential and could do very well in the area that they are in, but we could not assume that the numbers would be too high. We would like to assume that the business would grow slowly and eventually reach their maximum potential.