|
Korean Job Discussion Forums
"The Internet's Meeting Place for ESL/EFL Teachers from Around the World!"
|
| View previous topic :: View next topic |
| Author |
Message |
maverick
Joined: 31 May 2007
|
 Posted: Fri Jan 02, 2009 7:44 pm Post subject: |
 |
|
Golem has it mostly right. There is no minimum student number needed, however. Perhaps old rules that have since changed? There are a ton of rule changes for the 09 year. Perhaps, Golem, your friend isn't in Seoul proper? Could be a million different things. Nambu Education office's rules are the ones we are required to follow.
Yes, The 20 mil. includes everything (ie. desks, tables chairs, heaters, air conditioners, computers, seasonal decorations, books, etc...). Everything is being left for the new owners.
As I said earlier, ideal for any couple who is just starting out and looking to make their own dent. |
|
| Back to top |
|
 |
Informer
Joined: 21 Sep 2006
Location: Bundang
|
| Posted: Fri Jan 02, 2009 9:45 pm Post subject: |
|
|
| maverick wrote: |
Golem has it mostly right. There is no minimum student number needed, however. Perhaps old rules that have since changed? There are a ton of rule changes for the 09 year. Perhaps, Golem, your friend isn't in Seoul proper? Could be a million different things. Nambu Education office's rules are the ones we are required to follow.
Yes, The 20 mil. includes everything (ie. desks, tables chairs, heaters, air conditioners, computers, seasonal decorations, books, etc...). Everything is being left for the new owners.
As I said earlier, ideal for any couple who is just starting out and looking to make their own dent. |
Well depending on how many students you have, this might be a good opportunity. |
|
| Back to top |
|
|
regicide
Joined: 01 Sep 2006
Location: United States
|
| Posted: Sun Jan 04, 2009 6:45 am Post subject: |
|
|
| huffdaddy wrote: |
| sungmin1982 wrote: |
| Pictures would definitely not be personal. You are selling a hagwon, not porn. You are looking for someone to invest 40,000 dollars, basically, into a hagwon... |
FWIW, 40,000,000 Won is closer to $30,000 these days. |
Either of which are chump change- - the price of a car. Try going "into business" back home for an investment like this.
One rule of thumb is to price a business at 1 , 1.5 or 2 times annual gross.
Using that formula at 1.5 , the business would only need to gross 13,000,000 per year to have a cost ( the key money is not the business per se) of 20,000,000.
The school has an established student base and you could simply walk in for your 20,000,000 won or an amount of money that most teachers over here could save in a year or two, so it is not your life savings on the line. |
|
| Back to top |
|
|
huffdaddy
Joined: 25 Nov 2005
|
| Posted: Sun Jan 04, 2009 7:44 am Post subject: |
|
|
| regicide wrote: |
One rule of thumb is to price a business at 1 , 1.5 or 2 times annual gross. |
I'd be more interested in the price to earnings ratio.
| Quote: |
| Using that formula at 1.5 , the business would only need to gross 13,000,000 per year to have a cost ( the key money is not the business per se) of 20,000,000. |
Given that you should easily be making 30+ million a year by just teaching, with no financial risk involved, 13 million a year of revenue wouldn't quite make sense. |
|
| Back to top |
|
|
regicide
Joined: 01 Sep 2006
Location: United States
|
| Posted: Sun Jan 04, 2009 8:32 am Post subject: |
|
|
| huffdaddy wrote: |
I'd be more interested in the price to earnings ratio.
|
I am not sure how you would get that, Huff. The PE is net income divided by the number of shares of an entity, right? Or in there another formulae used to price businesses.
Clearly, 13 million would not be enough income, nor does this owner say that is what he is earning. I believe he said he grosses 9 million a month and has 2.5 in expenses for a net of 6.5.
That would make the business worth 162,000,000 using that forumla.
(1.5 times a yearly gross of 108,000,000)
Even one times net would be 78,000,000.
(6.5 million times 12) |
|
| Back to top |
|
|
huffdaddy
Joined: 25 Nov 2005
|
| Posted: Sun Jan 04, 2009 2:44 pm Post subject: |
|
|
| regicide wrote: |
| huffdaddy wrote: |
I'd be more interested in the price to earnings ratio.
|
I am not sure how you would get that, Huff. The PE is net income divided by the number of shares of an entity, right? |
Price/Earnings. The ideal P/E will vary by industry and company. Revenue is largely irrelevant if a profit isn't being made.
You can also look at book value, which is the price of the assets. Anything above that would be good will, or the value of the business name.
| Quote: |
Clearly, 13 million would not be enough income, nor does this owner say that is what he is earning. I believe he said he grosses 9 million a month and has 2.5 in expenses for a net of 6.5.
That would make the business worth 162,000,000 using that forumla.
|
Using 9 million a month of revenue and 6.5 million net, he's not factoring in the earnings of him and his wife. Figure a minimum of 3 million a month for each, which leaves 500,000 a month profit. That's 6 million a year. Subtract another 2 million (roughly) for the annual opportunity cost of the deposit and that leaves 4 million a year in earnings. 20 million/4 million would be a P/E of 5. That would usually be a good P/E. (162/4, or a P/E of 40 probably isn't). But in the fickle world of hagwons and Korea, I'm not sure would an appropriate P/E would be.
Then again, a couple with the visas and experience to buy the hagwon (I'm assuming a waeg + Korean) would have much higher opportunity costs. They could probably easily make 6.5 million on their own, without the financial risks of ownership. |
|
| Back to top |
|
|
OneWayTraffic
Joined: 14 Mar 2005
|
| Posted: Sun Jan 04, 2009 4:36 pm Post subject: |
|
|
| huffdaddy wrote: |
| regicide wrote: |
| huffdaddy wrote: |
I'd be more interested in the price to earnings ratio.
|
I am not sure how you would get that, Huff. The PE is net income divided by the number of shares of an entity, right? |
Price/Earnings. The ideal P/E will vary by industry and company. Revenue is largely irrelevant if a profit isn't being made.
You can also look at book value, which is the price of the assets. Anything above that would be good will, or the value of the business name.
| Quote: |
Clearly, 13 million would not be enough income, nor does this owner say that is what he is earning. I believe he said he grosses 9 million a month and has 2.5 in expenses for a net of 6.5.
That would make the business worth 162,000,000 using that forumla.
|
Using 9 million a month of revenue and 6.5 million net, he's not factoring in the earnings of him and his wife. Figure a minimum of 3 million a month for each, which leaves 500,000 a month profit. That's 6 million a year. Subtract another 2 million (roughly) for the annual opportunity cost of the deposit and that leaves 4 million a year in earnings. 20 million/4 million would be a P/E of 5. That would usually be a good P/E. (162/4, or a P/E of 40 probably isn't). But in the fickle world of hagwons and Korea, I'm not sure would an appropriate P/E would be.
Then again, a couple with the visas and experience to buy the hagwon (I'm assuming a waeg + Korean) would have much higher opportunity costs. They could probably easily make 6.5 million on their own, without the financial risks of ownership. |
This analysis was similar to my own. Somehow my post got eaten by the board monster.
It's a good return for the money. Small businesses tend to be less about P/E and more about buying yourself a job. The quality of the job is more important than return on the (small) investment here. 3 million is more than my wife could make for example, though less than I make. She's good at the administrative stuff though.
Maverick, if I was you, I'd keep this business. With a young'un on the way you'll need the income. Hire someone to help with the extra teaching, or with nannying. Work harder- your expenses will go up. There's the advantage that you can take the baby to work with you, an option that many don't have. That's what I'd do anyway. Enlist her mother to help, if she will. |
|
| Back to top |
|
|
enns
Joined: 02 May 2006
|
| Posted: Sun Jan 04, 2009 9:59 pm Post subject: |
|
|
| Absolutely a steal for 20 million, I'm surprised that no one has closed on this yet. |
|
| Back to top |
|
|
itaewonguy
Joined: 25 Mar 2003
|
| Posted: Sun Jan 04, 2009 11:50 pm Post subject: |
|
|
| enns wrote: |
| Absolutely a steal for 20 million, I'm surprised that no one has closed on this yet. |
well a lot of factors come into it..
how many classrooms are there?
how many desk and chairs can fit max in each classroom?
whats the maximum student count the school can hold>
whats the location of the school, is their a public school near by
or any large francise schools next door killing everyone in sight!
how many apartments near by..
do you use a bus driver? whats the expense is there room for a driver?
whats the management fee?
whats the student tuition fee? is their room to increase that fee due to demographics of the school?
hows the interior of the school? is it run down are their private bathrooms for the school or do you share in the building with smoking ajossis who fill the bathroom with smoke and spit all over the floors!!
yeah 20 million sounds cheap,, doesn't mean its a good investment..
but if someone is serious they should contact the OP and arrange to meet up and see the school... sounds nice..
I think we need to see pictures though... |
|
| Back to top |
|
|
maverick
Joined: 31 May 2007
|
| Posted: Mon Jan 05, 2009 8:09 am Post subject: |
|
|
| SOLD!!! Thanks to all the interested parties who emailed. |
|
| Back to top |
|
|
chrisyurhee
Joined: 20 Jan 2009
Location: Seoul
|
| Posted: Wed Jan 28, 2009 6:50 am Post subject: Check with the local education board first! |
|
|
Some foreigners have been issued licenses (by the dept. of education) to run haagwons by accident, especially if they're Korean ethnicity. I personally know one that went that way, and they're doing well.
There are very strict requirements in some areas, Incheon for example, which requires a min. of 120 pyung, and they measure it with a laser!
Do your homework first, and if it all checks out, it could be a great opportunity.
The harder you work,
The luckier you get... |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
