Selling Your FedEx Routes: How Long Will the Process Take?
Just as it took time to build your FedEx route business, selling it will not happen overnight. However, with a little preparation and the help of an experienced broker, the process of selling your FedEx routes can be a painless and ultimately rewarding endeavour.
What is the average sale time?
Most FedEx route operations are sold within three to six months. Keep in mind that the sales process involves multiple steps, and being underprepared may slow things down considerably.
Before you make the decision to sell your FedEx routes, there are a few things you can do to help the process go more smoothly.
Thinking about selling your routes? Here’s a helpful checklist.
- Be prepared to explain why you are getting out of the business. One of the most common questions we hear from buyers is, “If the business is so great, why are you selling?”
- Check to ensure all of your business records and financial statements are well-kept and readily accessible. Providing a clean profit and loss (P&L) statement will also help to maximize the value of your routes.
- Prepare a proactive due diligence package that includes items such as payroll reports, repair and maintenance records, a copy of your Fedex contract, tax returns, and other documents. Buyers will often pay more when this information is readily available and well-organized.
- Have your RFI (business plan) available and be prepared to assist the buyer with their RFI when the time comes to apply for FedEx approval.
- Be prepared to help the new buyer with contingency planning in the short term. This will provide the buyer peace of mind that you will be available for support in the event there is any employee turnover during the transition.
- Ensure all prospective buyers sign a confidentiality agreement before you give them any information whatsoever.
- Make sure you have an earnest money deposit (typically 5-10% of the purchase price) before you introduce the buyer to your drivers or terminal manager. This deposit is often refundable if the buyer is not approved by FedEx.
A few more things to remember:
It is important for sellers to understand how the valuation is impacted by the debt of the business. In most cases, the business and vehicles are conveyed free-and-clear to the new buyer. However, in certain instances vehicle debt and/or lease assumptions are the preferred option.
In either scenario, it is important to understand the ramifications. KR Capital has a number of reliable financing sources available in case the buyer needs additional capital to purchase the routes.
When’s the best time to sell?
Properly timing the sale of your FedEx routes can help you get the best price.
Because FedEx is busiest during the winter holidays (the “peak” season), they often will not approve route transfers during November and December. This means that if you get too far into the year, you may be asked to wait until January to close the sale. For this reason, make sure you give yourself enough time to get the routes sold (3-6 months) in the timeframe you desire.
You should also take into account how profitable your business has been in the past year. Valuations are most heavily weighted based on the previous 12-month period. Therefore, if you had a banner year in the previous 12 months, the time may be right to sell. On the other hand, if you’ve experienced a lot of employee turnover or unusually high repairs and maintenance, you may want to right the ship before deciding to sell.
Sell your FedEx Routes with KR Capital.
KR Capital is an industry leader specializing exclusively in the sale of FedEx routes. We have worked with hundreds of FedEx contractors nationwide to successfully value, market, and sell their routes for a premium price, and we can help you do the same.
Our proprietary database allows sellers to connect with vetted buyers, and our three-tiered marketing process results in an average of 43 buyer inquiries per deal.