WhiteRoom Posted January 24, 2013 Share Posted January 24, 2013 Hi there, newbie here. This forum has a ton of very helpful information, thank you for that! There is a lot of talk about putting a value on locations, but I haven't been able to find much related to locations with longer term contracts. Say 3 years plus? My foggy recollection from college would be to discount expected cash flows from each year back to the present, but I was wondering if there was some sort of insider rule of thumb? I understand that contracts are no guarantee and service will be key in getting those expected cash flows, but a seller is going to want extra for a high grossing account with a long term contract. What's fair? Thanks! Link to comment Share on other sites More sharing options...
Sparta_Automation Posted January 24, 2013 Share Posted January 24, 2013 Generally speaking....you will see most will value locations with equipment at about 8 - 10 months of proven revenue. You may see a little more added if there is a contract that you will be assuming. I have even seen some people say never offer more then the value of the equipment that you are getting in the sale..... Travis Link to comment Share on other sites More sharing options...
mission vending Posted January 24, 2013 Share Posted January 24, 2013 Hi there, newbie here. This forum has a ton of very helpful information, thank you for that! There is a lot of talk about putting a value on locations, but I haven't been able to find much related to locations with longer term contracts. Say 3 years plus? My foggy recollection from college would be to discount expected cash flows from each year back to the present, but I was wondering if there was some sort of insider rule of thumb? I understand that contracts are no guarantee and service will be key in getting those expected cash flows, but a seller is going to want extra for a high grossing account with a long term contract. What's fair? Thanks! There are many way to determine value of a location with equipment, at the end what is fair is whatever you can negotiate that you find acceptable to pay. For me as an example a location that generates $1,000.00 a month with equipment less than 5 years old would be worth 5-7K, if there was a long term contract in place I would consider paying more but only if the contract was solid. By that I mean no "out" for the location except for service but only after a right to cure period and that it was also transferrable to you without voiding the contract. Something like that to me would be worth MAYBE 2K more. Lots of other variables to consider as well, do I want to grow at this point, does it fit the route, do I like the location and the people etc. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.