FedEx is the name of the American multinational of delivery services you already know, but it’s also an abbreviation for Federal Express, a route model which promises to deliver products in a very short period of time.
FedEx also started a system that can track packages and provide real-time updates on the packages location, which helps to find when they are lost as well.
However, FedEx is now a new business model’s name too. Since the American corporation innovated in carrier services, other firms started to do the same.
Once someone decided to start a FedEx route, it requires very organized systems and a big investment. It’s definitely not an easy business to run.
But if you decided to sell it, then there are several key pieces of information that you must keep in mind before setting your asking price. Check out the following topics and learn how to sell your FedEx route for the max value.
What is your FedEx Route business worth?
FedEx routes are considered established businesses. Even if the route you’re purchasing is new, the territory it covers has been there ever since FedEx corporation began.
However, as the population grows in the United States, more and more routes will be created to service that demand. But if you’re intelligent and hardworking, FedEx routes come in at one of the lowest risk investments a new business owner can make.
Despite all that, you still have your reasons to sell it, so now the challenge isn’t about running the business, but learning how to sell it for maximum value. Look at these metrics:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a FedEx Route business worth more?
A FedEx Route usually is worth more when the firm is present in other states or when it covers long distances with the same efficiency than it does with small ones.
Also, use of technology in the company’s routine is a very important differential, in the same way the following metrics are too. Check them out:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average FedEx Route business sell for?
Since 2008, there have been 285 FedEx routes sales in the United States, with an average sales price of $373,5k and total transaction value of more than $106 million, those are very high numbers.
But as we have already said, FedEx routes are profitable businesses with low investment risk, so average multiple of 2.32x is not a surprise, although it is not an extreme high average too. Even so, it means that FedEx routes usual asking price is twice bigger than average gross income.
What is the most frequent deal size?
The most frequent size is $600k, which indicates that FedEx routes are more valuable than most of the American industries.
As you can see in the chart, the most frequent deal size is between $500k and $1 million, while most of industries are usually worth less than $250k.
In 2018 and 2017 there were more deals between $500k-1 million, followed by $250-500k and $0-250k.
Is the FedEx Route market getting bigger?
Yes! There has not been a better year than 2018 so far. Before it, 2017 was the best, and before this title belonged to 2016.
Of course, it’s expected that 2019 is going to be even better than last year, with a probable total transaction value higher than $50 million.
Are bigger businesses worth more?
Yes, when it comes to FedEx routes it is clear that the bigger the business the more profitable and valuable it is.
In 2018 for example deals closed up $250k had a multiple of 2.38x, while $250-500k multiple was 2.81x and $500k-1 million was 3.05x, a little bit smaller than $1-2 million, which finished last year with a multiple of 3.17x.
What states have the most FedEx Route business deals?
FedEx routes are in living an excellent moment in the United States, and the best state to sell your business is Florida. In California, Texas and New York you may find some good opportunities as well.
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your FedEx Route business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 9 months, but you can also see deals getting closed in 3 to 6 months depending on the opportunity.
What is the process of selling your FedEx Route business?
This step by step process will help clarify the business sale process. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. If you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your FedEx Route, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the carrier industry it may likely be a person who already had a business in the logistics or a similar field.
How should I sell my Fedex route?
Marketplaces – (under $500k yearly profit)
Smaller business and micro-businesses are usually best sold privately by the owner through forums or classified websites.
To sell your Fedex route, check out:
Broker/M&A Advisor – ($500k – $10m yearly profit)
Medium sized businesses in the $100k-$20m are best sold through brokers who help with finding buyers, negotiating and structuring the deal. To sell your Fedex route, check out:
Investment Banks – (Over $10m yearly profit)
Larger businesses are best sold through investment banks or merger and acquisition companies. To sell your Fedex route, check out:
How much will it cost to sell my Fedex route?
Generally a business broker will charge 8-12% of the sales price of an Fedex route including inventory depending on the deal size. Larger deals attract a smaller fee. Below is a range of fees at each deal value level.
- Under $1m – 12%
- $1m -$4m – 10%
- $4m -$10m – 8%
- $10m -$25m – 6%
- $25m + – 4%
2018 couldn’t be better for FedEx Routes in the United States, and the businesses are getting better and bigger year by year. It’s expected that 2019 is going to be record-breaking again.
FedEx Routes are a very safe investment and very profitable as well, so if you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any questions or feedback, we are glad to hear your thoughts!