Guide
What to establish before paying for a pub valuation
Updated
A pub valuation is expensive and it is payable whatever the outcome. Everything below can be established first, and any one of them can end the case before you spend anything.
The tie, and whether it transfers
Ask whether the pub is tied, on what terms, and whether the arrangement transfers with the property. It affects the sustainable profit a valuer will accept and therefore the going concern value your loan sits against.
This is a document question rather than an opinion question. Get the agreement and have a solicitor read it.
Planning and alternative use
Establish the planning position on the property, including any protection on public house use. It sets the bricks and mortar floor under the loan and it decides what your exit looks like if the trade does not work.
It is also the question most likely to differ from what the selling agent's particulars imply.
Accounts and licence
Ask how many years of accounts a lender wants and check the seller can produce them in that form. Then check the premises licence and any conditions attached to it, since conditions on hours or activities feed directly into maintainable trade.
A licence with restrictive conditions can make a business plan undeliverable while the pub still looks perfectly good on a visit.
Capital expenditure
Walk the building with somebody who knows what a commercial kitchen, a cellar and a flat roof cost. Deferred maintenance reduces the valuation and it also lands on you in year one, when cash is tightest.
Then ask the lender what capex they assume in the maintainable figure. If your number and theirs differ materially, one of you is wrong and it is worth finding out which before completion.