UAE Restaurant Group Valuation to Determine Investment Attractiveness

Client Situation

Our client is a private investment fund management subsidiary of a Chinese full-service investment bank aimed at engaging in direct investment operations. The client was planning to invest in a restaurant and catering group, which owned six restaurants, and two catering outlets across Abu Dhabi, UAE. The client was trying to assess the financial feasibility and attractiveness of making the investment.

Cedar’s Approach

The client had mandated Cedar to prepare a valuation model and financial projections to facilitate the assessment of investment attractiveness. Cedar’s approach was as follows:

Collection and validation of internal data gathered by the client
Primary research through interviews conducted with key individuals within the food services industry
Collection and validation of secondary research performed by Cedar
Integration and analysis of all gathered inputs
Financial modelling and analysis based on gathered inputs and Cedar’s expertise

Outcome

The key outcomes of this program were as follows :

Potential valuation models were determined using Discounted Cash Flow (DCF) and Comparable Multiples (CM)
Key assumptions were established to facilitate estimations for the calculations involved in the development of projections and valuations
Development of conservative and aggressive incremental revenue projections for the new outlets
Key risk considerations were identified for the client:

Associated Legal Action Risk & Regulation Risks
License Loss Risk: Possibility of losing an outlet’s trade license
New Outlet Risk: Risk involved in investing in new outlets due to potential for non-performance, which may cause financial duress