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Exit strategy?


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Just wondering if any of you have an exit strategy? The more we grow I'm worried about how do we exit vending when the time comes.

At this point there aren't many independent operators that would have the funds to buy us out, around $475,000 yearly gross. I worry about taking payments on a large sum in case the buyer fails and selling to a large company seems like they would pay pennies on the dollar.

Let me hear some solutions! I'm not specifically trying to sell my company now, but I always like to look forward to the future.

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Depending on your market size you can use a broker to sell it for you. You will need to be patient if you want to be cashed out.  To ensure the quickest sale you should have as many locations under contract as possible, pay low commissions, have all machines in perfect condition, have all machines validated, have no below-market prices, have well trained and uniformed employees, have all equipment paid for, have card readers in all appropriate locations, have complete and accurate records, etc.

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Although it's not common I actually do have everything you mentioned. With the exception of no employees. Just me and a business partner run everything.

Are there vending specific brokers? I don't have any experience with that.

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In our large market there are 1 or 2 that specialize in vending but any reputable business broker can represent you.  As long as they take the time to understand the nuances of vending they should do fine.  Just realize that their cut comes off the top and if you want all cash that will hamstring them to some extent. Stick to your guns if you want all cash and don't get desperate or in a hurry.

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Been thinking about this lately. Especially when you lose accounts. Sometimes ill lose an act that makes 20k a year an im.like damn i shouldve sold it lol. Now that i got a huge contract thats 6 years im thinking doing 4 years and then selling for maybe 18 month gross

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I would never pay three years gross plus equipment. That's insane.  At a rate of 25%/year, it  would take 12 years to pay for the value of three years gross ALONE. Not including equipment or interest. One year's gross is a fair number in my mind.

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As a vendor and locator/ broker in Houston I always suggest 1 years gross per account plus a reasonable price for the machines . Having a record of the gross income from each account is a must if you want a fair selling price . Although most vendors that want out would like to sell the whole operation at one time , sometimes the bigger you are you may need to sell in fractions because it can be hard for some vendors to come up with the cash at once and you don't want to finance in this business. Splitting a business up can be tricky though because you don't want to sell all of your best accounts at once and be stuck with your slower accounts so you should mix them up so that the buyers don't get stuck with only the slower accounts.


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24 minutes ago, Randymire said:

As a vendor and locator/ broker in Houston I always suggest 1 years gross per account plus a reasonable price for the machines . Having a record of the gross income from each account is a must if you want a fair selling price . Although most vendors that want out would like to sell the whole operation at one time , sometimes the bigger you are you may need to sell in fractions because it can be hard for some vendors to come up with the cash at once and you don't want to finance in this business. Splitting a business up can be tricky though because you don't want to sell all of your best accounts at once and be stuck with your slower accounts so you should mix them up so that the buyers don't get stuck with only the slower accounts.


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If this is true and somebody wants a turn key operation for one years gross vend sales. ($600k) Let me know! 

I will include all the equipment,inventory,change funds,trucks-everything!!!

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12 hours ago, Snickers said:

If this is true and somebody wants a turn key operation for one years gross vend sales. ($600k) Let me know! 

I will include all the equipment,inventory,change funds,trucks-everything!!!

Just out of curiosity how many accounts and drivers do have to generate the $600k yearly??

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I'm not sure how many accounts/machines-it's a bunch. Some are twice a week some are twice a month but the majority is once a week. We have some pretty decent accounts but lots of $30 a week machines out there. Myself and 1 full time driver. A girl in the office (30 hours a week) that does all the backend work. We move all equipment ourselves. We fix all of our own equipment. We don't pre-kit anything. 

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Hmmm

I bought it turnkey and bought it right. Built it up of course with blood sweat and beers and countless hours.

I hope to find a way to sell it within 5 years. 

It sounds like it will be a pretty decent payday IF I can find a buyer. Not too many people around here that are actually willing to work could swing the #s. I don't have any family so it can't stay it's got to go. I would like to think we could do it forever but we can't. My only 2 employees have been with me from the beginning and are gold-I can't see me in it without them.  Maybe using a broker would be my best option but when does one make that phone call? 

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Why not get yourself a good manager, teach them the business and then run it from a distance while keeping electronic tabs on things?  A nice little cash producer for you with hopefully minimal work.

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10 hours ago, AZVendor said:

A nice little cash producer for you with hopefully minimal work.

Would rather have the cash all at once and let someone else worry about the what ifs

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This is a very interesting thread! I've been looking for that mystical buyer for awhile myself. I have done a lot of advertising etc etc. but as far as cashing out the whole company all I have come up with are lowballers and dreamers (no money) So for the past three years I have been selling off the farthest out business by route. It has been the only way I could actually get the cash.

I have tried to be pretty hands off the past year just managing etc. Its expensive to replace your own labor and day to day management. No one will really take care of the business like the owner will. But I look at it as paying for some freedom. Everything has been long paid for so there is a lot of room financially for me to do this.

I have been able to sell about half the business and cut two employees. Doing this does decrease some of your buying power and efficiency. So I suspect anyone would have the same issues. The way things look right now is that as I am able to pare off more routes I will get to a very solid core. At that time it may make sense to offer it to the most loyal trusted employee(s). Yea I may need to finance at that point but I would know they can be successful and I know from  their years of service they are trustworthy.

Just my thoughts.

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I wouldn't mind selling off portions of my route over time if I felt like it was realistic for the new owner to service the machines properly. I know I'm not the only person who could run a vending company but it doesn't seem like most people really have what it takes to make it all work.

Ultimately if the buyer fails and has horrible service or abandons the machines I still get the call to come solve the problem.

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When I was an employee, the idea was thrown out that perhaps I could become a manager one day and operate the business while the owners collected passive income.  I wouldn't have minded the work back then as long as the owners stayed away.  In more recent years, an owner of a different company that I am well acquainted with had brought up a couple different ideas should he ever decide to exit.  His first idea was for me to buy him out except he gets to keep a small route with no option to get more accounts or be competitive.  I know the guy so it wouldn't bother me if that ever happened.  He would just want to stay fit, have something to do, and make a little money.  The other option was for him to buy me out and hire me as his manager so he can take as much as 4 days off each week and only come in for paperwork and helping with sales work with big potential customers.  With either company, I was always flattered that two different companies threw out the idea of making me their manager, but I have also realized that it IS hard to sell out.  If someone has the money, it's easy, but most people don't and many investors completely overlook vending.  The only thing that holds me back from becoming a manager is that I like having full control over my time.  I'm spoiled!

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