Business Valuation Mandate in a Tourism Group Restructuring Context
Independent valuation of a tourism group conducted ahead of a recovery plan and capital reorganisation
Description of the mandate: valuation of a French tourism group ahead of a recovery plan
The engagement focused on the determination of the real economic value of a French tourism group facing a weakened financial situation, ahead of the implementation of a global recovery and capital reorganisation plan. The business valuation formed part of a strategic advisory engagement preceding the raising of new financing and the renegotiation of existing debt.
The company, with historical brand recognition in the package tour market, faced a complex sector context marked by declining demand and rising operating costs. This mandate constituted the first stage of a global advisory framework, also including the valuation of financial instruments and the group's brand.
Key challenges: assessing the residual value of a distressed group with recovery prospects
The main challenges of the mandate were:
- assessing the residual economic value of a distressed group while integrating operational recovery prospects;
- evaluating the sustainability of the business model in a post-crisis environment;
- distinguishing operating value from the patrimonial value of fixed and intangible assets;
- providing a reference for renegotiation with creditors and potential investors.
Approach and outcomes: cross-checking adjusted earnings, comparable multiples and conservative-scenario DCF
The valuation deployed several complementary approaches:
- a capitalised earnings approach, based on profitability adjusted for non-recurring crisis items;
- a transaction multiples approach, based on a panel of comparable players in tourism and leisure (EV/EBITDA multiples typically between 5.0x and 8.0x at the end of the crisis);
- a discounted cash flow (DCF) approach incorporating a conservative three-year recovery scenario, with a high specific risk premium reflecting operational uncertainty;
- an explicit reading of the liquidation value serving as a reference floor.
The valuation enabled the determination of a conservative economic value range, serving as a reference for renegotiation with creditors and investors. The conclusions also fed discussions related to capital restructuring and the valuation of subsidiary stakes.
Illustrative example: numerical application to a tourism group in recovery
For illustrative purposes only — unrelated to the actual data of the mandate — a tourism group generating EUR 200M in revenue (-30% vs pre-crisis) with normalised EBITDA expected at EUR 8-12M over a 3-year horizon could exhibit an enterprise value range of between EUR 35M and 90M. The gap reflects the risk premium applied to the DCF (WACC at 12-15%) and the uncertainty regarding the recovery trajectory. The liquidation value of tangible assets constitutes a defensive floor for creditors.
Summary: 5-week mandate, three cross-checked methods, basis for the global restructuring
Business valuation mandate delivered in 5 weeks for a French tourism group undergoing restructuring. Three methods deployed (adjusted earnings, comparable multiples, conservative DCF). Deliverable: independent report serving as the basis for discussions with creditors and as a pivot for the two parallel mandates (financial instruments, brand).
Frequently asked questions: distressed value, conservative scenarios and liquidation floor
How to value a company in economic distress?
Valuing a distressed company rests on three pillars: (i) DCF with a conservative scenario and high risk premium, (ii) multiples adjusted for the sector cyclical trough, (iii) liquidation value as a floor. Cross-checking these three methods frames the negotiation range between shareholders and creditors.
What risk premium in a distressed context?
In a distressed context, the cost of capital incorporates a specific risk premium of 3-6% added to the standard WACC, i.e. a typical discount rate of 12-18%. This premium reflects sustainability uncertainty, recovery plan execution risk and an increased illiquidity discount.
Why integrate the liquidation value?
The liquidation value serves as a defensive floor for creditors: if operating value is lower, the recovery is not economically justified and an orderly liquidation may be preferable. It is a useful marker to frame negotiations and anticipate alternative scenarios.
How long does a restructuring valuation take?
The standard duration is 4 to 7 weeks, subject to the availability of financial documentation and the recovery business plan. The mandate described was completed in 5 weeks.
How to articulate this valuation with the other mandates of the global plan?
The business valuation articulates with (i) the financial instrument valuation (debt, convertibles) which calibrates the post-restructuring target structure, (ii) the intangible asset valuation (brand) which isolates a divestible asset. Methodological consistency between the three mandates secures the overall framework.
Is the valuation usable in judicial proceedings?
A methodologically robust independent report is generally admissible in conciliation or safeguard proceedings (Book VI of the French Commercial Code). It can be updated by a judicial expert if proceedings require. Source traceability and IVS compliance strengthen the report's credibility before the court.
Similar mandates: other business valuations in restructuring or transfer contexts
The transactions shown include those completed by, or with the involvement of, Hectelion team members in current or previous professional roles. They are presented for illustrative purposes only and do not imply exclusive responsibility by Hectelion.
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The transactions presented were carried out by, with the contribution of, or with the participation of members of the Hectelion team in the context of functions performed currently or previously.