Thanks Luke...in my experience, I would tend to look at asset values. that said, there is no mention of what assets are owned or if they debt is on the assets. I'd ask myself what am I buying? Customers? Assets? Cashflows? Brand? I noted Jeff's comment about discounted cash flow and that is an approach. But there are no positive cash flows as I understood, so you'd have to determine is there is expense bloat and if you could got it prior to taking ownership. I have bought businesses that were losing money and essentially closed the sale and had to hire back the people we wanted and purged the business of expenses. Go in with your eyes wide open. I think the easy answer is to walk away before you get in to deep. But its going to take a lot more work to figure it out.

Apart from the financial drivers, I would also look at the operational drivers. i.e., identifying the reason for poor performance - can those be fixed without significant capital requirements. I would include those costs in deal model and evaluate if acquisition still makes sense. brand value and market opportunity are other factors which can be considered to facilitate decision making. in the end it would boil down down to risk apetite of the buyer and investors. securing senior debt would be very difficult.