business valuation

[bcron]

I know it's been asked before, but as I remember in the past, a general valuation for a route is 1.5 times gross sales plus the value of the machines?  Sound reasonable?

[mission vending]

I know it's been asked before, but as I remember in the past, a general valuation for a route is 1.5 times gross sales plus the value of the machines?  Sound reasonable?

 

 

For me more like 50% of gross sales, on location equipment included plus value of other assets, idle machine, inventory, vehicles etc.

[moondog]

I know it's been asked before, but as I remember in the past, a general valuation for a route is 1.5 times gross sales plus the value of the machines?  Sound reasonable?

That's a bit high.  I use fair value of equipment plus three months gross.  This usually falls in the same range as Mission's formula.  

[AZVendor]

There is no general rule of thumb to value a vending business.  As you can see from the 2 answers above, there are a variety of ways to determine fair value.  Some people will use some factor of gross sales, some will use a factor of gross profit, some who price their route don't have any idea how they did it or use some concocted calculation that only makes sense to them. 

 

The best way to determine the value is to calculate how long it would take you to earn your money back, or your ROI (return on investment).  To do this, you need to know substantial proven facts such as average gross sales over 1 year or more, gross profit, commissions paid, other expenses paid to run the route.  You need to know the value of the machines based on the models of machines as well as bill validators, coin mechs, age and condition of machines.  Are any accounts under contract and for how long?  Is there any money owed or financed on the machines?  Is there a vending management company involved?  What are the commission rates paid?

 

As you can see, no rule of thumb can be applied necessarily, but you could use one as a start to a negotiated end.  It will depend on how comfortable you are with the deal and with whom you are dealing with.  If you have any specific questions pertaining to a deal,  post them here and you will get plenty of answers.