jt13 Posted June 13, 2010 Share Posted June 13, 2010 Looking at a route for sale: Around $90k revenues (all machines are at one location, large hotel) machines are 6 years old; 9 ams combo visi sensit II, 1 large soda, 1 small soda, 1 large snack upper teens commission gross sales claims about 40% profit margin asking close to 1x gross sales I've been to the location with him and everything looks legit. Opinions on valuation? Link to comment Share on other sites More sharing options...
Sparta_Automation Posted June 13, 2010 Share Posted June 13, 2010 so....if they are asking approx 90K for this location with machines. I'm assuming it comes with the inventory and money in the machines on the day they are turned over to you. With a 40% profit, you'll be clearing approx 36K each year. That's a 2.5 year payback. That seems too long for my liking. Although I have never bought an existing location, when I am looking to place machines, I would like a payback model of a year or less. Personally, I would pass on it unless they are willing to take much less for it. Travis Link to comment Share on other sites More sharing options...
jt13 Posted June 13, 2010 Author Share Posted June 13, 2010 Thanks Travis. Yeah, the financials are in the mail so I'll have a better idea of profit but the asking price is definitely way high. Trying to decide on an opening bid. From what I'm reading on here people like to try and pay 1x profits. Forgot to mention it comes with a van too. 6 years old. 100k miles. Contract with hotel is renewed yearly based on customer service and you paying the commission on time I'm guessing. Link to comment Share on other sites More sharing options...
mission vending Posted June 14, 2010 Share Posted June 14, 2010 My offer would be at best 35-40K including all inventory, coin mech money and the van provided the one yr contract renewal starts about the same time as your purchase. Link to comment Share on other sites More sharing options...
jt13 Posted June 14, 2010 Author Share Posted June 14, 2010 Thanks for your time mission. Link to comment Share on other sites More sharing options...
jt13 Posted June 19, 2010 Author Share Posted June 19, 2010 After getting the financials this is what I'm thinking: 50% COGS 18% commission 6% sales tax 3% misc repairs, guess, etc. This leaves about 23% pre-tax profit. So from what I'm reading on here $25k offer would be the starting point. Don't think he'll bite but we'll see. Link to comment Share on other sites More sharing options...
sbishop Posted June 19, 2010 Share Posted June 19, 2010 Remember it is business. You have to make the numbers work for you. Do not get caught up in the emotion of the purchase. You need to have the mind set that you will walk away from any deal. I looked at a route. The guy asked 10k obo in the ad. When I looked at everything I was willing to offer the 10k. He then told me that he had 3 other offers. 1 for 15k and 2 for 12k. I told him I was wasting his time and that he should take one of the offers......3 months latter he offered the route to me again and I bought it for 7k. Remember there are always other options. This is not your only opportunity to get into vending. There is also a lot of risk in this deal. What happens if they contract is not renewed? where are you going to store all those machines? How are you going to move them? Link to comment Share on other sites More sharing options...
jt13 Posted June 20, 2010 Author Share Posted June 20, 2010 Thanks sbishop for the note. Yeah, as part of the deal I would make it contingent on a new contract with the hotel so I would have at least a full year. But like you said it's business and since I'm a newbie at this I'm going to wait for the right deal to come along. There aren't many deals here in the dc area from what I've seen so far though. I might have to start from scratch and hit the pavement. But you never know, the guy with the route in question may realize my offer is the only legitimate offer. He said he had 2 guys interested but could not get loans from the bank. I could pay cash. Link to comment Share on other sites More sharing options...
mxer518 Posted June 20, 2010 Share Posted June 20, 2010 I have been caught up in the emotions of the purchase in the past and have greatly regret doing so. When you think there are no deals to be had they will start popping up all over. Just remember for large sums of money you can always buy very good used equipment and pay a quality locating service like blue moose and end up with a route that has the equipment spread out and thus adding some more security to the investment. Link to comment Share on other sites More sharing options...
jt13 Posted June 20, 2010 Author Share Posted June 20, 2010 Thanks mxer for your note. That's a very interesting idea. If I don't find anything by the end of summer I might just do that. If so, could I ping you on here about what to buy and where to find good deals? Thanks, James Link to comment Share on other sites More sharing options...
sbishop Posted June 20, 2010 Share Posted June 20, 2010 It is better to start slow than to start off on the wrong foot with a bad deal Link to comment Share on other sites More sharing options...
mission vending Posted June 21, 2010 Share Posted June 21, 2010 It is better to start slow than to start off on the wrong foot with a bad deal Been there, done that, and not only have the T-shirt but also got it tattooed on my _______ (fill in the blank) Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now