How Are Rights Valued?

The price asked for a management rights business will typically be comprised of the value of the unit (manager’s lot) and the value of the business. The unit price will reflect market values for similar manager’s units across a comparable range. Also reflected in the unit price will be any inclusion of an office or reception area. It is not unusual for the manager’s unit to command a slightly higher price than other units in the building due to considerations such as exclusive access to common areas.

The management rights value will be determined by the application of a multiple to the net profit for sale purposes. For example, a net profit of $200K at a multiple of 5 times would equate to an asking price of $1M for the business. If the unit was valued at $500K then the total asking price would stand at $1.5M. It is essential that property value and multiple trends are taken into consideration when purchasing management rights. With a significant sales data base we are able to provide context for intending purchasers.