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Looking for FedEx home delivery routes in the San Francisco Bay
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<blockquote data-quote="Socrates101" data-source="post: 2098452" data-attributes="member: 61915"><p>Thanks for the input. Everybody posts asking prices at about 3x EBITDA. The key question is what is EBITDA. It is my impression that EBITDA is in the 20-25% range while brokers routinely post listings with EBITDA margins in the 30s and some times high 30s. Also, it depends a lot on how one runs the business since there are some guys that fix their own rucks, change oil, change tires etc. This will make the tax returns look better than reality. Also, don't forget that at the end of the day one needs to take into account truck replacement. With CA regulations many trucks with relatively low mileage will need to be replaced over the next 3-4 years. This is serious money and at the end of the day the advertised deal for 3 X EBITDA ends up being 5-6 x real cash flow. Some people have told me that deals happen around the country at 60-70% of gross, which is in full agreement to the 20-25% margin quoted above. This is the reason that I would like to network with operators, potentially those that are not selling their businesses to see what reality is. Currently there are a ton of listings in the SF Bay area, most at 6-8X real cash flow that haven't moved for months. I guess that indicates that operators (people smarter than me) aren't biting. Thus, I am afraid that those selling are looking for the next sucker.... and I don't want to be that.</p></blockquote><p></p>
[QUOTE="Socrates101, post: 2098452, member: 61915"] Thanks for the input. Everybody posts asking prices at about 3x EBITDA. The key question is what is EBITDA. It is my impression that EBITDA is in the 20-25% range while brokers routinely post listings with EBITDA margins in the 30s and some times high 30s. Also, it depends a lot on how one runs the business since there are some guys that fix their own rucks, change oil, change tires etc. This will make the tax returns look better than reality. Also, don't forget that at the end of the day one needs to take into account truck replacement. With CA regulations many trucks with relatively low mileage will need to be replaced over the next 3-4 years. This is serious money and at the end of the day the advertised deal for 3 X EBITDA ends up being 5-6 x real cash flow. Some people have told me that deals happen around the country at 60-70% of gross, which is in full agreement to the 20-25% margin quoted above. This is the reason that I would like to network with operators, potentially those that are not selling their businesses to see what reality is. Currently there are a ton of listings in the SF Bay area, most at 6-8X real cash flow that haven't moved for months. I guess that indicates that operators (people smarter than me) aren't biting. Thus, I am afraid that those selling are looking for the next sucker.... and I don't want to be that. [/QUOTE]
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