(Topic ID: 199230)

Got an offer to sell my route.... How much is it worth?


By Okarcades

1 year ago



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  • 76 posts
  • 45 Pinsiders participating
  • Latest reply 1 year ago by LTG
  • Topic is favorited by 7 Pinsiders

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    #1 1 year ago

    I have a guy who has interest in buying my small route with only 2 locations. 1 OK location and one amazing location. The 2 together bring in around $900 a month after splitting with location.

    Great location games
    1. Medieval madness Remake
    2. Adam's Family
    3. Star Trek pro

    OK location
    1. Attack from Mars original
    2. Terminator 2

    All games are regularly maintained and In excellent shape and fully led'd with a few mods on each.

    How do I price to sell games as well as future income?

    I'm thinking $50,000...... $30,000 for games and $20,000 for future earnings and all parts inventory.

    What do you guys think?

    #2 1 year ago
    Quoted from Okarcades:

    I have a guy who has interest in buying my small route with only 2 locations. 1 OK location and one amazing location. The 2 together bring in around $900 a month after splitting with location.
    Great location games
    1. Medieval madness Remake
    2. Adam's Family
    3. Star Trek pro
    OK location
    1. Attack from Mars original
    2. Terminator 2
    All games are regularly maintained and In excellent shape and fully led'd with a few mods on each.
    How do I price to sell games as well as future income?
    I'm thinking $50,000...... $30,000 for games and $20,000 for future earnings and all parts inventory.
    What do you guys think?

    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...

    #3 1 year ago

    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 ?

    #4 1 year ago

    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.

    -1
    #5 1 year ago
    Quoted from Okarcades:

    I have a guy who has interest in buying my small route with only 2 locations. 1 OK location and one amazing location. The 2 together bring in around $900 a month after splitting with location.
    Great location games
    1. Medieval madness Remake
    2. Adam's Family
    3. Star Trek pro
    OK location
    1. Attack from Mars original
    2. Terminator 2
    All games are regularly maintained and In excellent shape and fully led'd with a few mods on each.
    How do I price to sell games as well as future income?
    I'm thinking $50,000...... $30,000 for games and $20,000 for future earnings and all parts inventory.
    What do you guys think?

    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.

    #6 1 year ago
    Quoted from PtownPin:

    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

    #7 1 year ago

    I'd say somewhere in the 40-50 range

    #8 1 year ago

    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

    #9 1 year ago

    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.

    #10 1 year ago
    Quoted from cosmokramer:

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

    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)....

    #11 1 year ago

    $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.

    #12 1 year ago
    Quoted from PtownPin:

    My bad....I forgot about the lower two games....sorry about that

    I would be shocked if he even considered paying you that. The games are worth $24-$26K (+ 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.

    #13 1 year ago

    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.

    #14 1 year ago

    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.

    #15 1 year ago

    One location is at a barcade which earns excellent. Small bar with big crowd. The other location is a brewery with two games in a high traffic area with lots of loyal customers.

    Most businesses sell there companies based off of future earnings. The new buyer could increase revenue and earn quicker or do nothing and continue cash flow.

    Most companies values are based in future earnings. It wouldn't make sense to sell for the price of the games only.

    In business there is risk and if you want to buy a business that cash flows then you pay according to current and future earnings.

    No business sells just based in assets.

    #16 1 year ago
    Quoted from Okarcades:

    One location is at a barcade which earns excellent. Small bar with big crowd. The other location is a brewery with two games in a high traffic area with lots of loyal customers.
    Most businesses sell there companies based off of future earnings. The new buyer could increase revenue and earn quicker or do nothing and continue cash flow.
    Most companies values are based in future earnings. It wouldn't make sense to sell for the price of the games only.
    In business there is risk and if you want to buy a business that cash flows then you pay according to current and future earnings.
    No business sells just based in assets.

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

    #17 1 year ago
    Quoted from BC_Gambit:

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

    To see if anyone has done this in the past. Either bought it sold. I'd like to know how they came to an agreement on price.

    #18 1 year ago
    Quoted from PtownPin:

    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)....

    What about the original AFM and the T2?

    #19 1 year ago

    Afm -$7000
    Mmr- $7000
    St - $4500
    T2 - $2500
    Af - $6500

    Get away $2500

    I also have a getaway I forgot to add since it's not on route right now. So that's how I came up with $30,000.

    Take $900 x 24 months and you get $21,600

    Inventory including over 1000 comet 2smd leds and hundreds of titan silicone bands , every replacement coil any of these games would need, eos switches, and basically enough parts to last 24 months. And 4 back up bill acceptors.

    All games have bill acceptors as well as payrange systems.

    All income has been proven in my taxes and documented for 3 years.

    #20 1 year ago
    Quoted from Okarcades:

    Afm -$7000
    Mmr- $7000
    St - $4500
    T2 - $2500
    Af - $6500
    Get away $2500
    I also have a getaway I forgot to add since it's not on route right now. So that's how I came up with $30,000.
    Take $900 x 24 months and you get $21,600
    Inventory including over 1000 comet 2smd leds and hundreds of titan silicone bands , every replacement coil any of these games would need, eos switches, and basically enough parts to last 24 months. And 4 back up bill acceptors.
    All games have bill acceptors as well as payrange systems.
    All income has been proven in my taxes and documented for 3 years.

    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 .

    #21 1 year ago

    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.

    #22 1 year ago

    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.

    #23 1 year ago
    Quoted from Travish:

    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.

    He has a route now with 15 locations

    Quoted from sbmania:

    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.

    There is no reason to sell a business based on strictly assets. Yes there written contracts with both locations.

    #24 1 year ago

    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.

    #25 1 year ago

    35k would be my offer, no more.

    #26 1 year ago

    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.

    #27 1 year ago
    Quoted from Cruster:

    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.

    So youre saying I should sell games and give them my route for free?

    Or sell the route and give the games for free?

    That doesn't seem to make sense to me.

    #28 1 year ago

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

    #29 1 year ago

    I don't have an offer yet. Just asked if I'd be willing to sell.

    #30 1 year ago

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

    #31 1 year ago
    Quoted from Okarcades:

    There is no reason to sell a business based on strictly assets. Yes there written contracts with both locations.

    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.

    #32 1 year ago

    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)

    #33 1 year ago
    Quoted from Okarcades:

    Afm -$7000
    Mmr- $7000
    St - $4500
    T2 - $2500
    Af - $6500
    Get away $2500
    I also have a getaway I forgot to add since it's not on route right now. So that's how I came up with $30,000.
    Take $900 x 24 months and you get $21,600
    Inventory including over 1000 comet 2smd leds and hundreds of titan silicone bands , every replacement coil any of these games would need, eos switches, and basically enough parts to last 24 months. And 4 back up bill acceptors.
    All games have bill acceptors as well as payrange systems.
    All income has been proven in my taxes and documented for 3 years.

    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.

    #34 1 year ago

    I Don't mind operating but I've started another business that is taking up much of my time and it's hard to keep up with the pinball stuff.

    If the price isn't right I will continue to route.

    If the price is right then I will.

    I was just wondering what the norm was for this transaction.

    #35 1 year ago
    Quoted from Okarcades:

    I Don't mind operating but I've started another business that is taking up much of my time and it's hard to keep up with the pinball stuff.
    If the price isn't right I will continue to route.
    If the price is right then I will.
    I was just wondering what the norm was for this transaction.

    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.

    #36 1 year ago

    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.

    #37 1 year ago

    10k by Christmas

    #38 1 year ago
    Quoted from Okarcades:

    I Don't mind operating but I've started another business that is taking up much of my time and it's hard to keep up with the pinball stuff.

    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.

    Quoted from RobKnapp:

    Check with your CPA on your depreciation schedule on your machines you wrote off under your business .

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

    #39 1 year ago

    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 : )

    #40 1 year ago

    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.

    #41 1 year ago
    Quoted from goatdan:

    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

    Where are you getting $2,700 a year?

    The guy already has 15 other locations and I fix my games once a month and only takes 4-5 hours at most

    $900 for 5 hours of work every month is pretty good. As I said before I have enough parts on hand to fix all these games for years to come.

    #42 1 year ago

    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.

    #43 1 year ago

    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.

    #44 1 year ago

    I like that answer ^^^^ maybe 2 years was too much but one would sense.

    #45 1 year ago

    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.

    #46 1 year ago

    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.

    #47 1 year ago
    Quoted from Okarcades:

    Where are you getting $2,700 a year?
    The guy already has 15 other locations and I fix my games once a month and only takes 4-5 hours at most
    $900 for 5 hours of work every month is pretty good. As I said before I have enough parts on hand to fix all these games for years to come.

    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.

    #48 1 year ago
    Quoted from goatdan:

    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.

    #49 1 year ago

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

    #50 1 year ago

    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.

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