10 Tips To Sell Your FedEx Routes
For those FedEx contractors who are contemplating the sale of your routes in the near or distant future, here are some things you can do to maximize their value…
1.) Keep clean records and be able to produce a clean P&L (cash buyers pay more when you can produce clean financial statements – as opposed to just giving them a couple settlement statements).
2.) Prepare a pro-active due diligence package for the buyers. This includes items such as payroll reports, annual repairs and maintenance records, a copy of your Fedex contract, tax returns, etc. Buyers pay more when the information is readily available and organized.
3.) Have your RFI (business plan) available and be prepared to offer your buyer assistance with their RFI when the time comes to apply for FedEx approval.
4.) Be prepared to help the new buyer with contingency planning in the short-term. Buyers will pay more if they aren’t worried that all drivers will leave them the moment they take over.
5.) IMPORTANT: Make sure you have a non-refundable deposit before you introduce the new buyer to your drivers or terminal manager. We typically ask for 10% of the purchase price (non-refundable) to be held in escrow once the due diligence period is complete. Note: The deposit is often refundable in the event the buyer is not approved by FedEx.
6.) Understand the valuation differences between a sale that is free of vehicle debt, vs. a sale where the buyer assumes vehicle debt (we can help with this).
7.) Ensure all prospective buyers sign a confidentiality agreement before you give them any information whatsoever.
8.) If you’re considering using a broker, ask for a list of references and a summary of FedEx deals completed so that you can see the prices they’ve negotiated for similar route sales.
9.) Be prepared to explain why you’re getting out of the business. A common buyer question is: “If the business is so great, why are you selling?”
10.) Have a reliable financing source available should the buyer need some additional capital to purchase the routes. (We can help with this).