I dont see those 5 games being worth 30k being sold individually....even harder to imagine that price for a bulk deal...I have no idea how to price the future earnings...

I also don't think you can ask him to pay for almost 2 years of earnings at your $900/month mark ... Why would he do that ?

The reality is that its not worth much unless you have a solid contract with locations, machines are aged and lose value from wear and tear. If someone offers $20k you better jump all over that.

I would be shocked if he even considered paying you that. The games are worth $18-$20K (+ parts) depending on condition, and game plays (hope u installed protectors). The locations could have value if your contractually locked into the locations. If so then asking for future revenue might be justified.

Lets be reasonable...the games are worth more than 18-20k

I'd say somewhere in the 40-50 range

I would do face value of pins in their current condition plus 1.5 years of location earnings. A lot of good or bad things can happen in 18 months. If I were local and interested I'd offer right around $40k

what happens if the locations tell him to get games out? if he pays for 2 years of location earnings, he is also actually paying you more than that as he has to do collections and maintenance during those 2 years of making nothing. calls, cleaning, gas, time, repairs.
also, what type of split are you doing with location? hope not 50%, esp on pins. these days ops should get way more than 50%. not even worth it.
lots of variables my friend. price of pins to high IMO as well.

I don't think so....u can buy a HUO low play MMR for $7.5K, AF all day for $7K, and a Star Trek Pro for less than $5K....these games have all been on route so theres zero chance their worth more than that (probably less)....

$50k LOL, if you have no contract with locations a competitor can come in and offer a better deal to location owners and now its worth nothing. No smart business owner in their right mind is going to offer this and take a chance of getting squeezed out or buy a route with a 1 year contract.

I'm thinking I hope you're paying taxes on your earnings posting numbers on here . I'm in agreement with others, I think you'll have a hard time getting the buyer to pay out 100% of future earnings. More power to you if you can get that much though.

I personally view the $900 month mostly as a salary or time spent on collections, repairs, parts, so it adds little to the value of the machines. $32k would be my estimate.

If you know this much why are you publicly asking this here?

What about the original AFM and the T2?

It sounds like you have things figured out for the most part , which is good considering this is your bussiness .
There has to be a number that makes it worth while for you to sell , if your not comfortable selling for less just keep it . If this is established and has contract for long term than defanitly does ad value beyond assets .

Does the buyer have any pinball experience? They might not know what they are getting into and be "ignorant" of upkeep and only see the $900 a month figure and throw them off. If I didn't know anything about pins I might make a offer higher than realistic.

If you don't have written contracts with your stops, earnings mean nothing to a new buyer. He should pay for value of games and not a penny more.
Stops put new operators in all the time, especially when the old guy leaves.

20k on future earnings? If you can make 20k in a year on those 5 games, you might not want to sell the routes, especially after the splits. Even if. Does someone want to route for a year for free without making a dime, because they already spent 20k ahead of time? I wouldn't.

35k would be my offer, no more.

Pretty normal rate to sell locations is 20 or so months of earnings, or agreed upon value of the equipment. Ive never seen operators buy locations based on equipment value plus earnings potential. If I was buying that, I would just assign the pins a little higher then normal used equip value since they are on location and that's it.

Sounds like the buyer is an experienced operator...what's his offer?

I would guess most operators would be offering 25k max. If you can get someone to pay anywhere near 50k, grab it and run!

Once you normalize the business for any operating expenses (paying labor for repairs, collections, etc) you aren't looking at two years of earnings for value. If the time put into paying someone else to do those things (even if you in reality do it yourself) each year is $10,800/year or more, you only have the cost of the machines as the business value. You would only assess a multiple of net profit into your company value in addition to your capital if you could come out with a net profit after paying out all your operating costs including labor.

I am curious in knowing what the norm is for this type of business. I do know that the 'formula' for selling businesses varies substantially with the type of business. Some are valued as multiples of revenue. However, those tend to be high growth companies valued on the potential future earnings. In this case, seems like valuation would be based on assets and profit, not revenue. The $900/month figure is not profit. The new operator will have to pay taxes and insurance, they will have to dedicate time to service the routes. The older the machines are and the more they are played, the more time and parts will be required. Add to this there are no contracts on the route and a relatively small moat for a competitor to cross and I wouldn't think there would be much of a multiple on revenue.

(As a sidenote, lots of business are sold on the value of assets alone. In fact some are sold not on the value of the business related assets but on the value of the real estate the business is sitting on)

This is your price and exactly in my line of thought on what it should sell for.

Do you want to get out of operating is the real question?

If not, then why consider it unless he is offering a golden handshake deal you can't refuse?

If so, then I would get as close to that offer as you can.

Check with your CPA on your depreciation schedule on your machines you wrote off under your business . There may be some issues with IRS if you sell. Cover all your bases.

Why not sell the route bare and leave it up to the buyer to supply the games? They could buy several decent titles NIB for $20-30k. Just ask 20-30k for the route and let them buy 5 NIB games. It would freshen things up for the regular players in the area too.

10k by Christmas

i was going to ask, and now you have added, whether you may have better opportunity/use for the money from an eventual sale. sounds like one consideration here is having 30K tied up in machines, the true net out of 900/mo, and how much of your time is involved in handling the route; versus having that 30K working where it might be better served [new business venture] while at the same time freeing up your pinball time for that new venture as well.

another consideration. since pins have tended to hold value, you might be looking at having to recapture most depreciation taken as ordinary income.

It used to be you sold an arcade, equipment plus two years earnings. They will ask for tax records.

A route, with contracts, substantially less. Depreciated value of used machines and potential earnings.

I'd contact you, ask to see the equipment and locations. And then go solicit them myself. Don't need you.

LTG : )

Yeah, I'm with Lloyd here. The buyer seems like he wants to know how much they make so he can go take over himself and offer a better deal.

And without you sharing the details of your contracts, it's hard to know how to value them. I figure your contracts are worth somewhere around 75% of current earnings (remember, anyone investing time and money in keeping going need to be compensated for that - the business is worth it's earnings after those expenses, not before... this may even be low) times the amount of time left on the contract. Otherwise, you always run the risk of having someone pop in when they are done and renegotiate the contracts and take your spot.

I would also value the equipment separately than the route itself. It's a lot cleaner to say that the route location is this and you're looking for this for the games. Also, although you are probably fairly valuing the games at regular market prices for peer to peer sales, as an operator I don't know I would want to pay that much for them. I'm thinking you are closer to $26,000 or so for the games as it's own piece.

The route then, if it is $900 a month, I would consider it $675 per month left on the contract. That would be $16,200 for the route piece of it.

Having said that, you're still going to have a hard sell. If you drop the price to $40k, you're asking someone to take on a business that theoretically makes $2,700 each year, so to "pay it off" will take almost 15 years. And yes, you can sell the assets in between and theoretically cash out - IF they remain in the same condition - but that doesn't make it a great deal.

I had worked for a couple operators in the 80s. I was told value of equipment plus 6 months income back then was typical for purchase or sale.

I have never routed games before but I do have over 40 years of business experience & semi retired when I was in my early 50's. From my experience the number you are looking for is a number that makes sense to everyone. Only you and the buyer can try to come up with that number but if I were in your shoes - having other ventures taking your time & having an interested buyer - I would try very hard to sell while you can.

With that said I would start somewhere around $45,000 to $48,000 and my bottom line would be $39,000. My logic is: one year of income and decent return on investment for your machines would be around $39,000 so to me anything less and it isn't worth selling. From that number it just depends on how bad he wants you locations & how badly you want to move on.

$45,000 would likely be a "fair" number for both of you but I wouldn't expect much over that regardless. No harm in starting a little higher but $50,000 might scare him away so I would start at $48,000 for good measure.

By posting on this forum you have:

1)Possibly made aware the location know you are selling and someone else will be managing the location games. He may have liked to know from you first.

2) gave competition ammunition to solicit your location based on revenue numbers, they may try and make an offer and steal it from you . you are left with equipment and no location. They can tell the location that you are posting on a forum with intent to sell, location may take offense to this.

3) Your potential buyer reads this forum and gets mixed info on what the spot is worth and backs out due to so many opinions.

In past I have sold locations. I once sold a contracted movie theatre chain to a competitor/friend of mine. We made a contract. I sold for fair market value of equipment in a refurbished state. Additionally, the yearly gross was averaged of the locations. Payments were to be 40% of avg gross income per location for a year of income. These were broken down on a monthly payment basis. If he were to lose the location due to closing he wouldn't be liable for the remainder % avg for that spot.
So if a location had 15K worth of equipment and grossed 10 k per year (before split) I would get 15k right away and 4000 for the year paid in monthly installments. After 1 year the spot was free and clear.
This worked nice for everyone as my competitor installed newer equipment so he had no trouble making the payments. BTW I already had a contract with the theatres and the GM was ok with me transitioning. Everyone benefitted.

You definitely want to contact the location first and let them know your making a transition of ownership and it will be to their benefit. When the time comes you can introduce the new owner.

On a side note I had fun operating but don't miss it. I'm down to 2 games on location now. Been operating since 1985.

I think value of the machines plus 12 months coin drop is typical. Could be as little as six months and as much as 18 depending on real amount of monthly drop. If you are making 900 a month then i would shoot for value of games plus 10k and would settle on an additional 8k.

There is definately value in the business. Butfive games is a prety small route in the grand scheme.

But they aren't getting $900 / month if they are paying that to you. The $2700 / month is if they pay you 75% of the profits until the contract runs out. 75% of $900 is $675. $900-$675=$225 left for them. $225 * 12 = $2700.

Ultimately, unless they want to get into the buying and selling of equipment, there's not that much there.

The operator is Okarcades and he is making $900 a month AFTER the split with his locations. Therefore he is grossing $900 x 12 = $10,800 a year on coin drop as the operator.

now are you guys figuring coin drop or % the op gets after the split with the house?

Hello everyone. If I may. Selling a route? Industry standard is 1 and a half times earnings. Which means one and a half years of net revenue is usually the sale amount. At 900 net monthly puts you at 16,200.00 plus fair market value on the equipment. Estimate because tbey are routed pins at 27,000 Total price puts it at 43,200.00 This May vary from time to time depending on the term of the location agreement or if any at all. The most important thing is what your location agreement says. How long is left on that agreement? What is your split and your responsibilities?

I will give you two examples of why selling price may vary. Imagine you sell this agreement and the location owner wants to change up a few things. He decides to put in more tables and remove the pins. Then what if you have no location agreement the new operator will be in a bad position.

Now this scenario say the location wants to keep pins in their place but wants the operator to invest and put in 5 brand new pins and remove the old ones. Again you see how this would affect the new operator.

If you have a long term agreement and it is worded in the best intrest of the operator you have something more valuable.

I hope this helps.