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What Are My Routes Worth?

Regardless of whether we are looking at P&D or linehaul runs, there is a fairly consistent way to calculate the value of a given set of FedEx routes.
Average Cash Flow Multiple for P&D Routes
Average Cash Flow Multiple for Linehaul Runs
Updated 01/24/2019

Find the Value of Your Routes

Although every FedEx1  operation is different, there is a fairly consistent way to calculate its value. The information below is intended not as formal valuation doctrine, but rather an easy-to-follow template to help you estimate the value of your routes.

Step 1: Compile a Profit and Loss Statement

In order to identify the value of your FedEx routes, you’ll need to first determine the free cash flow of your business. This is actually fairly easy to do. Whether you track your income and expenses yourself, or employ a bookkeeper/CPA to do it for you, we start with a traditional Profit and Loss statement to identify all income and expenses associated with your corporation. Your 1099 from FedEx will identify the gross revenue that your corporation has earned from FedEx. The next step is to list ALL expenses that have incurred by your corporation. These will include fuel, repairs and maintenance, payroll, insurance, etc.

Step 2: “Normalizing” the Profit and Loss Statement

Next, you’ll need to normalize your profit and loss statement (P&L) by identifying expenses that are 1) non-recurring, 2) personal in nature, 3) non-transferrable, 4) tax reduction strategies. In short, these are the expenses that a new buyer will likely not incur once they purchase your routes. Note these expenses in a spreadsheet (download our cash flow adjustment spreadsheet here) and add their total to the corporation’s net income. Examples of these expenses may include:

  • Interest payments for a loan that will be paid-off or not otherwise transfer to a new buyer
  • Personal expenses such as personal phone, personal fuel, home office, meals & entertainment expenses, etc.
  • Wages for non-essential employees on the payroll (i.e. a family member)
  • Depreciation / Amortization
  • Any other non-recurring or personal expenses (charitable contributions, owner retirement benefits, etc.)

Step 3: Identity Shareholder Compensation

For this step, you will need to identify all the ways in which the ownership of the corporation receives compensation. As the owner of your own corporation, you may pay yourself (and your fellow shareholders) in a variety of different ways. These may include a W-2 salary, member draws, etc. Officer wages (W-2) will either be lumped into the payroll expense, or separated out as “Officer Salary”. Note that member draws may not actually be recorded as an expense on the P&L. If member draws ARE identified as an expense on your P&L, these can be added to cash flow as well.

It should also be noted that if you (or another shareholder) are working as a full-time driver, your associated wages should not be added to the cash flow. This is due to the fact that a new buyer will need to replace your salary with that of a replacement driver. Once shareholder compensation is identified, 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.

Step 4: Determine Industry Multiple

Businesses are traditionally sold based on a multiple of their free cash flow, often referred to as “EBITDA” (earnings before interest, tax, depreciation, amortization). Depending on the industry, size of business, buyer type, etc. these multiples can vary to a large degree. Generally speaking, FedEx routes across the country sell for fairly consistent multiples. On average, FedEx routes sell at 2.5x to 3.5x the free cash flow of the business. The counters above show the current average industry multiples for P&D and Linehaul routes nationwide.  A link to a report with comparable FedEx route sales can be found below:

Market Comparables Report

If you are interested in having KR Capital perform a market valuation of your routes (free of charge), please contact us here.

Some factors that can influence valuation may include:


Age and condition of fleet


Debt associated with fleet


Location of runs


Manager(s) in place


Accounting for any buying/selling/trading of routes that may have occurred over the past 12 months


A recent increase in compensation rates from FedEx


Cleanliness of financials and supporting documentation


Dedicated vs. unassigned (linehaul only)


Compliance with FedEx ISP and overlap requirements

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