VendSoCA Posted March 17, 2018 Share Posted March 17, 2018 Is there a consensus on how to properly evaluate the fair market value of a route? (Whether you own or one for purchase) What I can see from an analysis perspective is you can start with 50% of the gross revenue? Typically the equipment, outside new (less than a year old) machines, is not a big factor. What you are really buying is the revenue? And the revenue is protected by the contracts? But, what if the route has NO contracts? That must dramatically increase the buyer's risk and reduce the seller's value? Link to comment Share on other sites More sharing options...
AZVendor Posted March 17, 2018 Share Posted March 17, 2018 Starting at one year's gross is pretty standard. From that you should deduct for aged machines, poorly maintained machines, no contracts, low prices, high commissions, value of ANY leased machine that isn't owned, etc. For every listed item that favors the buyer the better the value and higher the price will probably be. Link to comment Share on other sites More sharing options...
VendSoCA Posted March 17, 2018 Author Share Posted March 17, 2018 100% of gross profits (after cost of goods)? Or 100% of revenue? Link to comment Share on other sites More sharing options...
AZVendor Posted March 17, 2018 Share Posted March 17, 2018 Based on gross sales. Link to comment Share on other sites More sharing options...
AZVendor Posted March 17, 2018 Share Posted March 17, 2018 Based on gross sales. Link to comment Share on other sites More sharing options...
NYCandyMaN Posted March 18, 2018 Share Posted March 18, 2018 I never use contracts! puts the owner in a spot, if something happens, its not long before you become enemies Link to comment Share on other sites More sharing options...
Walta Posted March 18, 2018 Share Posted March 18, 2018 1 hour ago, NYCandyMan said: I never use contracts! puts the owner in a spot, if something happens, its not long before you become enemies If you are saying any contract between a vendor and locations is a waste of paper, I could not agree more. If you are saying any contract between vendors when selling a route is unnecessary, I could not disagree more. Walta Link to comment Share on other sites More sharing options...
VendSoCA Posted March 19, 2018 Author Share Posted March 19, 2018 So, when you are buying a route for a $100k+ with 10 locations and there are NO existing contracts between the locations and current owner, the risk to the buyer seems high, no? If you lose one (or more) of the 10 high volume locations soon after the transitions, that would seem to skew the acquisition cost much higher! Interesting to hear if most buyers are willing to buy routes without any contracts or binding agreements... Link to comment Share on other sites More sharing options...
AZVendor Posted March 19, 2018 Share Posted March 19, 2018 You generally don't find any contracts for smaller accounts. Handshake aggreements are the usual way of business for small vendors. The risk is yours to do your due diligence and provide better service than the previous owner to secure the accounts. Link to comment Share on other sites More sharing options...
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