vendnoob Posted February 17, 2009 Share Posted February 17, 2009 whow do you figure out what a location is worth that someone is selling? is there a formula that you use? i just found 5 more full line locations for sale. i would be greatful for any help i can get on this. this isnt like spending $50 on a bulk machine so i want to make sure im going about this the right way. i just cant afford to make an uneducated geuss on what i should be paying. thanks again for any help you guys can give me:) Link to comment Share on other sites More sharing options...
gmoney Posted February 17, 2009 Share Posted February 17, 2009 For what its worth, I have been told that the going rate for accounts is between $.40 - $.50 per dollar of annual sales. I am also looking to acquire additional accounts and looking at this as a benchmark it seems to be accurate. One thing to consider is the age and the quality of the equipment. If you are purchasing newer more reliable equipment with current technology the price should be higher. Link to comment Share on other sites More sharing options...
ageevending Posted February 18, 2009 Share Posted February 18, 2009 noob... there is no formula for what to pay... .50, .60, .40 on the dollar... what if the pricing is too high what if its too low... what if your margins are 10%? then does .50 on the dollar make sense? I value them several ways and then I go down from there. I use "scratch value", or how much would it cost me to get this account from scratch, what would a locator cost me, what would the machines cost, install costs, etc. I also do a "opportunity" value, I use the industry averages ($4 per week blue collar, $2 per week white collar) and multiply that by the number of workers, then I multipy it by my target gross margin, times 52. So say there are 200 blue collar workers, I would say the account is worth (200 x 4=800), then my target margin of 50% so (800x.50=400) then annualized (400x52=20,000) Finally, I do a reality check, what are the total annual sales, whats the annual gross margin, and what is the value of the machines (salvage). However I never consider the value of a machine in the price.. just want to know there is some value there if the account blows up. There isn't any perfect formula... I try to recapture my costs (gross profit) as fast as possible, and never longer than 1 year. You have to read each location for what it is... You could get an account that generating 30k in annual sales, but they are a pain in the butt and have speciality products that are hard to get and keep in stock... so... bottom line is "IT DEPENDS" Link to comment Share on other sites More sharing options...
vendnoob Posted February 18, 2009 Author Share Posted February 18, 2009 thanks alot. both of these help alot. it at least gives me a direction to go in. Link to comment Share on other sites More sharing options...
suncoast Posted February 18, 2009 Share Posted February 18, 2009 Agree Vending is right. I would add to this that as of this year I have done credit checks on each new account. If they are going down the tubes there is little point in going with them. This economy is going to reduce your sales in most accounts and well, you know what the rest is. There are some great deals in used machines right now + you can retro fit older snacks with MBD, $ accpt and even infrared eye tech for less than you would think. Link to comment Share on other sites More sharing options...
vendnoob Posted February 18, 2009 Author Share Posted February 18, 2009 you can retro fit older snacks with MBD what is that? Link to comment Share on other sites More sharing options...
ageevending Posted February 22, 2009 Share Posted February 22, 2009 if you don't know what MDB is don't worry about it... when you get big enough you will Link to comment Share on other sites More sharing options...
Raredory Posted February 22, 2009 Share Posted February 22, 2009 Could be nice and share the info anyways. Link to comment Share on other sites More sharing options...
coinvestor Posted February 22, 2009 Share Posted February 22, 2009 MDB - Stands for Multi-Drop Bus. This is the adopted standard for the interface between the changer and the machine. Before MDB each brand or model of machine would require a specific voltage of changer with a certain connector to fit. You may have a matching voltage, but a different connector, or a matching connector, but a different voltage. After the industry adopted the MDB standard, any MDB changer could be plugged into any MDB machine. This makes keeping replacment parts on hand easier. Converting a machine to be MDB capable makes sure that replacement changers will be availible. Hope this helps, JD Link to comment Share on other sites More sharing options...
caserri Posted February 22, 2009 Share Posted February 22, 2009 Thanks Coinvester. We must all remember that this board is primarily a learning tool. With that in mind, it is important to share knowledge with those seeking to learn. Vendnoob, In addition to JD's explanation, here is a link to a PDF entitled "Understanding MDB". It is a short 6 page document to help you out. http://www.compvend.com/mdb_info.pdf Steve Link to comment Share on other sites More sharing options...
coinvestor Posted February 22, 2009 Share Posted February 22, 2009 Steve, thats a great resource there! Thanks, JD Link to comment Share on other sites More sharing options...
alyssamma Posted February 22, 2009 Share Posted February 22, 2009 Vendnoob, there are some contracts in the library for purchasing full size machines...you should take a look at these. Specifically, check out the appendix. It will give you some ideas for things to check for. For example, you'll want to make sure the changers are full. This could be as much as $40-$50/machine. Also you'll want the machines stocked at normal levels, etc. Regardless, make sure you have some type of contract since this will be a large $ purchase. Kevin Link to comment Share on other sites More sharing options...
vendnoob Posted February 22, 2009 Author Share Posted February 22, 2009 JD, Steve, and Kevin thanks for all of you help and patience with me. You all have been very helpful. Link to comment Share on other sites More sharing options...
alyssamma Posted February 22, 2009 Share Posted February 22, 2009 vendnoob, one last thing...take a look at this thread: http://www.vendiscuss.com/forums/view_topic.php?id=2879&forum_id=3 Link to comment Share on other sites More sharing options...
ageevending Posted February 23, 2009 Share Posted February 23, 2009 wasn't trying to offend anyone... however noob was trying to figure out how to price an account. MDB is not important to the discussion and for a guy that doesn't even have first location, trying to understand the benefits of MDB don't make a lot of sense... MDB, DEX, etc... none of that matter if your not making money. Link to comment Share on other sites More sharing options...
vendnoob Posted February 23, 2009 Author Share Posted February 23, 2009 i have 2 full line location right now where i work. but i didnt buy those locations. i just asked my bose if it was ok. so i never bought a location before. ive had one for a few months and just started the other. Link to comment Share on other sites More sharing options...
coinvestor Posted February 23, 2009 Share Posted February 23, 2009 I agree with agee, you can't set the number or precentage in stone. I just looked at a route that had a location where the drink machine was in the bathroom next to the toilet. What is that worth? .50 on the dollar is a good starting point. Then use some common sense to adjust. Does the route have new equipment, old equipment, third party equipment, or a mix. Every route has some oditties, like a machine in a bathroom (although that was the first time I saw that), a non climate controlled snack machine in a non air conditioned area, a snack machine that is in a building near a public pool thats only open 5 months out of the year, a school thas closed for 4 months, you get my drift. There is no formula to help adjust the value for these situations. Remember the value of anyhthing is only what you or anyone else is willing to pay for it, and not a penny more. I love to talk to someone who has been trying to sell a route for a year, they have shown it many times but have not sold it. These people usually spend a long time trying to justify the reasons why they priced it the way they did, and they are usually bitter because they think everyone is wasting there time when in reality they are doing it to themselves. JD Link to comment Share on other sites More sharing options...
chgolee Posted February 23, 2009 Share Posted February 23, 2009 In regard to judging the value of a location, keep in mind the age and condition of the equipment in the locations mind. I have heard of people buying a location and then finding out that the location was tolerating the current equipment because they liked the old vendor. Since they won't have any relationship built up with you, they may demand newer equipment right away. So you may end up overpaying for the location. I have heard that the value of a location is in a lot of cases below $.40 on the dollar, unless it is newer equipment with good pricing and a location contract is in place. In figuring costs to update a used piece of equipment, it depends on what you want to do. Figure an aftermarket drop sensor to cost $150.00. Led lighting for snacks is from $30 to $150. I suggest using the ones around $150 as they run down the sides of the window giving the machine a brighter look. Others tell me it increases impulse sales. To go to MDB, the control board has to be replaced, at around $400-500, plus you will have to replace the bill acceptor and coin mech with compatible units; new price can be aproximately $400 and $250 respectively. Link to comment Share on other sites More sharing options...
ageevending Posted February 24, 2009 Share Posted February 24, 2009 I'd like to hear from someone that bought a location for less that 50% of annual sales. I'm not seeing anyone selling that low unless the route is doing 100k plus. I just bought a location for about 65% of gross sales, but the equipment was brand new all USI and AP, + a food machine and used coffee. Link to comment Share on other sites More sharing options...
coinvestor Posted February 24, 2009 Share Posted February 24, 2009 I'd like to hear from someone that bought a location for less that 50% of annual sales. I'm not seeing anyone selling that low unless the route is doing 100k plus. I just bought a location for about 65% of gross sales, but the equipment was brand new all USI and AP, + a food machine and used coffee. Agee, I had a long post typed then the page refreshed an it got wiped out, so I will summerize this time. I bought five older USI machines in three locations for 28% of gross sales. Annual sales were $9000 and I gave $2500 full of product and change. I bought a single location with three older USI machines for 19.5% gross sales. Annual sales were $7200 and I gave $1400. These are not normal aquisitions, and there are reasons that my offers where so low. All of the above equipment will probably need to be replaced in the next 2-3 years, some of it already has. All of the equipment needed rebuilt changers and validators almost right away. I will also add that I bought the single location the same day I inquired about it for the first time because the guy was motivated and needed it gone. The three location purchase the guy was moving in a year, I told him my best price and told him to give me a call if he can't get rid of it. He called me 2 days before it was moving day, so I waited a year for the deal. JD Link to comment Share on other sites More sharing options...
alyssamma Posted February 24, 2009 Share Posted February 24, 2009 Agee, I bought a route for $12.5K. The route did $24K/yr, but I also got about $1000 in stock + 1 spare machine, dolly, and lots of spare parts. Kevin Link to comment Share on other sites More sharing options...
vendnoob Posted February 24, 2009 Author Share Posted February 24, 2009 UPDATE: location #1 - 1 snack machine (sigiture 5 across 2002) 1 pepsi machine (3rd part vend) 1 coke machine (3rd part vend) located at hotel, 5 mile from metro airport. location #2 - 1 pepsi machine (3rd part vend) located at tanning salon. location #3 - 1 pepsi machine (3rd part vend) located at tanning salon. also included 2 signiture 5 across 2002 snack machines (need locations) i spoke to the owner of the hotel and he is going to honor the 4 1/2 years left on the contract. i talked her down from $6000.00 to $5000.00 and all machines are to be full of product at time of purchase. i will be completing the deal wed. best part is she is financing it for me( $500.00 down and the rest in monthly payments and NO intrest) Link to comment Share on other sites More sharing options...
coinvestor Posted February 24, 2009 Share Posted February 24, 2009 UPDATE: location #1 - 1 snack machine (sigiture 5 across 2002) 1 pepsi machine (3rd part vend) 1 coke machine (3rd part vend) located at hotel, 5 mile from metro airport. location #2 - 1 pepsi machine (3rd part vend) located at tanning salon. location #3 - 1 pepsi machine (3rd part vend) located at tanning salon. also included 2 signiture 5 across 2002 snack machines (need locations) i spoke to the owner of the hotel and he is going to honor the 4 1/2 years left on the contract. i talked her down from $6000.00 to $5000.00 and all machines are to be full of product at time of purchase. i will be completing the deal wed. best part is she is financing it for me( $500.00 down and the rest in monthly payments and NO intrest) What is a signature? What is the gross? JD Link to comment Share on other sites More sharing options...
vendnoob Posted February 25, 2009 Author Share Posted February 25, 2009 Signature is the name on the snack machine, maybe thats the model name. according to her records all together gross for 2008 was just over $20,000. and i already have locations for both of the machines she has in the garage. i have it writen up in the puchase agreement stating if it doesnt do at least $1600.00 gross in the first month then our agreement is void and i get my deposit back. Link to comment Share on other sites More sharing options...
vendnoob Posted February 25, 2009 Author Share Posted February 25, 2009 and by the way Steve i used the Route Purchase and Sales Agreements that you had posted. thanks i think it will work out great. Link to comment Share on other sites More sharing options...
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