Buying a business- Guy has no proof of numbers???

[Intouchvending]

So i'm looking into buying a 14 location route. It's soda/snack machines and the guy wants $65,000. He claims it makes 2700 per week gross and around 1600 profit per week. 2700x52=140,400 per year gross, or 83,200 profit. he also says he is running at 63% profit on his margins. The problem is, he doesn't want to deal with any lawyers, he doesn't have tax returns, he hand writes his collections so they arent recorded, and he also said he cant show me his USAT card reader reports due to it being connected to another account he has. Seems a bit sketchy right? He did show me to his locations and i will say all of them are indeed real locations. He even has a few locations in the nearby school system. Also, will be securing a high school soon which i know is legit but does not have yet. my main concern is he is not proving his numbers to me. also, tons of the machines are averaging over 200 per week. Is this even possible? here is an example of the machines and the weekly sales. For privacy purposes, i  will label them A-Z.

 

(Rough estimate of weekly gross per location) I wont say exact locations for obvious reasons.

A - 500 WAREHOUSE SETTING

B- 225 WORKSHOP

C- seasonal location POOL

D- seasonal location WATERFRONT

E- 400 BREAKROOM

F- 200 OFFICE

G- 130 BANK

H- 275 OFFICE

I- 250 OFFICE

 J- 130 ELEMENTARY SCHOOL (BREAK ROOM)

K- 175 ELEMENTARY SCHOOL (BREAK ROOM)

L- 500 ASSISTED LIVING

M- 175 OFFICE

N- 160 OFFICE

Assuming the high school locations goes through obviously that adds some great value to the route. So to sum it up, just based off past experiece, do these numbers seem attainable per week? How concerned should i be that he does not have inventory software to prove the numbers? How much value does it drop and is there anyway if i bought the route to protect myself from being royally screwed over? The locations are conveniently located near my house so in theory this would be a great thing if it worked out. i dont know if im missing any information but ill start from here. Thanks. (also he wants me to sign a basic pns stating a noncompete,sale of machines, etc. but doesnt want to deal with lawyers)

 

[Intouchvending]

btw its 14 locations, total of 25 machines. some have snack only,drink only, some have both. i believe 3 or 4 soda machines are owned by coke. 60% are decent to newer machines 40% older machines.

[WhiteRoom]

I'm certain that others have more experience than me, but this seems right at the very edge of credibility to me.  

I have two nursing homes that are my best accounts, they each do $200-$300/week out of a 4 wide snack and a DN5591.  After seven days the drinks are pretty decimated and the snacks at least half empty.  All the locations you are talking about would appear to just have two machines.  My point is, depending on the equipment, to get to most of those numbers, he would have to be servicing them twice a week.  Is that what he is telling you? I've never seen a vending business for sale in my area with such a collection of great accounts and no duds - even the office locations are doing good business which rarely happens.  And all for sale for 6 months gross?

If its accurate, its a tremendous deal and will be sold quickly.  He's gotta have some sort of documentation he can show you.  Deposit slips, receipts for inventory purchases, etc.  That's a lot of cash, there must be some records of it being deposited or spent somewhere.

[Intouchvending]

The part that doesnt settle well with me is the fact that he doesnt have definite proof to back up his numbers. He showed me a purchase receipt from his supplier and it is dated April of 2018. You would think he would show me every month if the sales were consistent. The purchase was for around $1200. If I can get him to show me the credit card readers for the 3 or 4 locations he has them in, they would also show cash sales as well because I know mine shows both cash and credit sales. I dont want to go too deep into his personal info but getting the bank statements isn't an option. Take a wild guess why lol. I'll leave it at that. It just sucks because I want the route but I NEED to know if numbers are legit.

[Intouchvending]

And yes the bigger ones he said 2 times a week

[Golfdogs]

I call BS on the school break rooms doing that kind of volume in a week.  Something smells fishy to me.  

[AngryChris]

Red flag after red flag. 

Selling accounts doing anywhere near 200/week is a red flag to me.  Why?  Because, even for large companies, they are typically very profitable.

Not providing proof of revenue is a red flag for reasons that should be obvious.

Claiming he can't show card reader sales is a red flag because the sales of the card reader are ONLY for that specific reader.  You can adjust the parameters of the report to show whatever you want.  Any time range, and dates, and whichever readers you want.  I can open my report and show you what account X did from 8am March 23rd to 5pm May 1st.  Either the seller doesn't understand how to use USA Live or just doesn't want you to see the real sales.

Selling a route that nets 83k for 65k? Unheard of.

25 machines in 14 locations? That means many are single machines.  A nursing home doing $500/week needs 3 machines minimum usually, or else competition will offer them the extra equipment.  

An elementary school break room averaging 130-175/week????  LOL.  COME ON!!

I have done many school break rooms in my time and I don't thank any serious vending company is going to get competitive with me for it.

A bank doing $130?!?

These just sound incredibly unrealistic and inflated to me.

Is $200/week attainable? Oh yes, easily.  There's nothing unusual about accounts doing that.  Thing is, for an office to do $200/week, it needs well over 100 full time employees unless there's significant outside traffic coming through.

Assisted living centers can do thousands each week under the right conditions, and the big boys DO go after those locations.  

Why on Earth would a vendor "net" 83k and sell it for 65k... All while keeping it all off the books.. that's what gets my scam buzzer going off.  In reality, I would expect maybe half of that after fuel, sales tax, repairs and maintenance, and other expenses are accounted for.  Everything just sounds HEAVILY inflated and with NOTHING to prove the numbers.. why would you ever believe a seller that not only won't give you proof but also won't even be honest with the government?

[AngryChris]

Unless the seller is absolutely desperate for money, or in a position where they cannot service the locations at all,then this sounds like a case of making golpher up to get someone to pay top dollar for turds.

For 65k, they better at LEAST let me see the usat reports for the past 2 months and past 12 months for the locations in question or I'm out.

[EddieMac]

I have several school accounts.  One does over $200.00 a week.  It would do more if I had the time to service it twice a week.  Another one does about $125.00 a week.  The rest of them are a little below average for me.  It depends on the school and who has access to the machines.  That biggest one is a PreK / Kindergarten school.  The middle and high schools get out earlier than the PreK/K school and most of the teachers there have children in other schools that come there after their schools get out.  They use the PreK/K machines when they get there and hang out waiting on their parents school to get out.  The schools have signs on the machines telling students they cannot use the machines during school hours.  Before and after school is when most of my machines do business.

[AngryChris]

13 minutes ago, EddieMac said:

I have several school accounts.  One does over $200.00 a week.  It would do more if I had the time to service it twice a week.  Another one does about $125.00 a week.  The rest of them are a little below average for me.  It depends on the school and who has access to the machines.  That biggest one is a PreK / Kindergarten school.  The middle and high schools get out earlier than the PreK/K school and most of the teachers there have children in other schools that come there after their schools get out.  They use the PreK/K machines when they get there and hang out waiting on their parents school to get out.  The schools have signs on the machines telling students they cannot use the machines during school hours.  Before and after school is when most of my machines do business.

That makes sense if there are people there after school.  The bulk of schools I have done close with an hour after the last Bell and no one hangs out there.  I have an elementary school that CAN do $100/week but that's the highest.  Every other school break room I have serviced has done no more than $30/machine per week during the school year.  So more power to you for doing so much but this all has me skeptical.

[Southeast Treats]

Lots of issues here, but the bottom line is he wants you to buy the proverbial "pig in a poke".   Not happening.  He has already told you he is cheating the government, so why would he not cheat you?  

[Intouchvending]

Thanks for the replies everyone. The other one doing 500 a week supposedly is a welding shop. Btw, we went to collect from one of the machines the other day because I wanted to see the money being collected in action. Obviously if he is lying who is to say he didnt go and stack the machine with money before I even went there. But anyway, the machine had around $400 in the snack machine ALONE. So many ones it was hard to even get it out of the cash box. This was a red flag to me. What is typically the max amount of Bill's a standard bill acceptor will take before it just literally cant hold any more? This is assuming that it is a 300 capacity version. But ya. Red flags all over. He is however getting the high school for real though. I believe it would be the break room. It's one of the biggest high schools in the state so I assume tons of teachers. What could I expect from that location ballpark figures just curious? He told me $800 a week and I thought it was bs.

[Intouchvending]

19 minutes ago, Southeast Treats said:

Lots of issues here, but the bottom line is he wants you to buy the proverbial "pig in a poke".   Not happening.  He has already told you he is cheating the government, so why would he not cheat you?  

I agree. He claims he doesnt have a lot of the info because hes going off the books. But I smell bs

[Intouchvending]

3 hours ago, AngryChris said:

Unless the seller is absolutely desperate for money, or in a position where they cannot service the locations at all,then this sounds like a case of making golpher up to get someone to pay top dollar for turds.

For 65k, they better at LEAST let me see the usat reports for the past 2 months and past 12 months for the locations in question or I'm out.

Thanns for the reply chris. And yes he said he is desperate because he lives an hour away and he is ready to be done with this route. That was his reason to me. He said it's a great deal and wont last long, which, if the numbers are true, he is absolutely right. I'm thinking of giving this guy an ultimatum but I want to do it in a nice way. What do you think I could do to once and for all settle this. I assume I can just say I need the Credit reader reports or I'm sorry it was nice talking to you. It frustrates me because I'm trying to expand and this location would have been perfect. It's literally 10 minutes away. But you know what they say about if it sounds too good to be true, then...... lol

[orsd]

Value of equipment + 100/ decent location is all I’d offer.

[lacanteen]

There is  whole lotta NOPE with this deal.

[AngryChris]

I have a welding shop with about 25 employees.  It does about $35/week.  I do the snack machine at a medium size high school.  It does $30/week and all of Pepsi's drinks are expired in the bevmax.

As for pulling $400 out of the snack... The machine must have been practically 100% empty with people constantly complaining.  I mean, that's a BARE machine.  Mine look pretty bad at $150 as the chips and pastries go first.  It's definitely possible to pull that many bills, but something seems off.

You need head counts.  How many welders did you see?

It COULD be real, but it seems like a well orchestrated scam.  Banks, teachers lounges, and offices don't usually do well unless there is a LOT of public Access (kids in the teachers lounges for example) or just a lot of workers.  I mean you need a bank with well over 50 people working full time and/or public Access to do anything over $100/week.

The locations being an hour away isn't a reason to be desperate.  Having the IRS after him would be a good reason to ditch it all though.

Riddle me this: what kind of vehicle does he use to service the accounts?

[AngryChris]

10 hours ago, Intouchvending said:

Thanns for the reply chris. And yes he said he is desperate because he lives an hour away and he is ready to be done with this route. That was his reason to me. He said it's a great deal and wont last long, which, if the numbers are true, he is absolutely right. I'm thinking of giving this guy an ultimatum but I want to do it in a nice way. What do you think I could do to once and for all settle this. I assume I can just say I need the Credit reader reports or I'm sorry it was nice talking to you. It frustrates me because I'm trying to expand and this location would have been perfect. It's literally 10 minutes away. But you know what they say about if it sounds too good to be true, then...... lol

Yes, get the reports just for the accounts.  Not all machines report cash & card sales but at least you'll get more info and hopefully some that do.  You can also look at the telemeter to verify the telemeter number and, if logged in, get the GPS coordinates  to see the general location.  He would have to run around changing telemeter to fudge those numbers.

You get reports or you should walk.  Pending a non disclosure agreement, the ONLY reason I can see for not offering you to see any usat reports is because the reports will tell you a different story than what he's telling you.

[AngryChris]

1 hour ago, lacanteen said:

There is  whole lotta NOPE with this deal.

Honestly, would you sell a route with these numbers?

[AngryChris]

Also, what are his prices?  You had to have seen them.

[lacanteen]

See if you can go to each machine, get a meter reading, then get another reading a week later. 63% gross profit is pure BS. The no records, no taxes is a 100 foot flashing red alarm. 

[Intouchvending]

4 hours ago, AngryChris said:

I have a welding shop with about 25 employees.  It does about $35/week.  I do the snack machine at a medium size high school.  It does $30/week and all of Pepsi's drinks are expired in the bevmax.

As for pulling $400 out of the snack... The machine must have been practically 100% empty with people constantly complaining.  I mean, that's a BARE machine.  Mine look pretty bad at $150 as the chips and pastries go first.  It's definitely possible to pull that many bills, but something seems off.

You need head counts.  How many welders did you see?

It COULD be real, but it seems like a well orchestrated scam.  Banks, teachers lounges, and offices don't usually do well unless there is a LOT of public Access (kids in the teachers lounges for example) or just a lot of workers.  I mean you need a bank with well over 50 people working full time and/or public Access to do anything over $100/week.

The locations being an hour away isn't a reason to be desperate.  Having the IRS after him would be a good reason to ditch it all though.

Riddle me this: what kind of vehicle does he use to service the accounts?

So he uses a van with a side door and back door as well. Cant think of the model but it's a 2016. Decent van. As for the bank, its upstairs in the corporate part so about 20 employees (maybe). The welding shop I saw maybe 7 to 10 people,  but he said there is 3 shifts and I only saw 1. 

[Intouchvending]

4 hours ago, AngryChris said:

Also, what are his prices?  You had to have seen them.

Prices were 1.00 on chips at a most places and 1.25 on chips at a few places. 1.00 for cans and 2.00 for bottled soda and 1.25 for candy.

[Intouchvending]

I waited weeks and he finally sends me his purchase receipt for his product and its dated April of 2018. APRIL of LAST YEAR! What is that supposed to tell me lol. I'm just gonna walk away.  I think my vision got clouded because I wanted the deal to work so bad. I'm sure that's happened to someone else before not just me lol. 

[Intouchvending]

On a side note is there any way in theory I could completely protect myself if i bought the route and he lied. Like i mean completely protect myself. I assume to do this i would need A LOT more than a PNS. But what exactly would i need.