How To Sell FedEx Routes for Maximum Profit
Owning and operating FedEx routes can be a lucrative business opportunity for the right person. However, as with any enterprise, there may come a time when you are ready to sell your FedEx P&D or linehaul routes and pursue other opportunities. It goes without saying that you want to sell your routes for the highest profit, but what is the best way to ensure that happens?
Here are a few things to keep in mind before setting your asking price.
How are FedEx routes valued?
FedEx routes are typically valued on a cash-free/debt-free basis, meaning any retained earnings accumulated in the business checking and savings accounts will remain with the seller. Your route valuation will be inclusive of the business itself, as well as any vehicles and related assets.
On average, FedEx P&D route businesses sell for 3–3.5X their free cash flow, while linehaul businesses can sell for upwards of 4X or more. However, a lot of that depends on how attractive your business is to potential buyers. While every FedEx operation is different, there is a fairly consistent way to calculate the value of your route business:
- First, compile a comprehensive profit and loss (P&L) statement to identify all income and expenses associated with your corporation and to determine the free cash flow of your business.
- Second, normalize your P&L statement to determine its true earnings.
- Third, list all of the ways your shareholders are compensated (e.g., W-2 salary, member draws) and add this figure to those adjustments identified in steps 1 and 2. The total of these adjustments will then be added to the net income on the P&L in order to arrive at a final free cash flow for the corporation.
What can you do to increase the value of your routes?
First and foremost, buyers will want to see that your business is profitable and has potential for growth. To show this, you will need to have your books in order. Be prepared to provide key financial documents to demonstrate that your business is financially healthy.
Interested buyers will also want to know about your employees and your equipment. Remember, they’re not just purchasing your routes; they’re also taking over management of your staff and assuming ownership of your vehicles and all other business assets. Are your employees hardworking and trustworthy? Do your drivers have a history of safety and longevity? Is your fleet of trucks in good working order and properly maintained? If so, your business will be even more attractive to buyers.
Finally, it is important that your FedEx route business operates efficiently and that there are systems in place to ensure processes such as scheduling, staff training, and day-to-day operations all run smoothly. This will put the buyer at ease and reassure them that the transition will be seamless.
An experienced broker can help you get the best price for your routes.
Because there are so many variables involved with selling a FedEx route business, it is better to work with a reputable brokerage firm than to go it alone.
An experienced broker does the complicated work of listing and marketing your routes, locating and vetting potential buyers, and handling all negotiations pertaining to the sale. In other words, your broker can save you a lot of the hassle of selling your FedEx routes so you can continue to focus on running a successful business.
Click here to find out more about the benefits of working with a FedEx broker.
Get a free market valuation of your routes from KR Capital.
If you are ready to sell your FedEx routes and interested in finding out how much they are worth, contact KR Capital today. Our comprehensive route valuation process takes into account current and historical financial statements, growth projections, local market conditions, vehicle fleet, management and operational considerations, and more. Each valuation is supported by current market comps, lender input, and vehicle appraisals to help you determine exactly what your FedEx routes are worth.
Fill out our brief Seller Info Request form to help us get to know your route business, and a member of our team will contact you shortly to arrange a call.