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Distributorship Rights - Valuation Question
Posted on 9/12/16 at 1:53 pm
Posted on 9/12/16 at 1:53 pm
Looking at buying distributorship rights.
How would I value what I should pay to take over these rights?
Any help is appreciated. Can provide some details, less specifics if need be.
How would I value what I should pay to take over these rights?
Any help is appreciated. Can provide some details, less specifics if need be.
2
Posted on 9/12/16 at 2:09 pm to ThatMakesSense
Are you talking about rights to distributions (like charging orders) or the rights in a goods distribution chain?
Posted on 9/12/16 at 2:25 pm to LSUFanHouston
Look at the distribution agreement and have a good understanding, especially the termination provision.
Posted on 9/12/16 at 4:01 pm to LSUFanHouston
quote:
rights in a goods distribution chain?
I'd have the rights to distribute a certain product in a specified area.
Posted on 9/12/16 at 4:03 pm to Fat Harry
quote:
especially the termination provision.
Guy I'd be acquiring the rights from said he would help in the wording of the contract, I asked how he worded it and he said, 'Will not be terminated for anything that can not be prosecuted.'
Posted on 9/12/16 at 4:03 pm to ThatMakesSense
Exclusive rights?
Posted on 9/12/16 at 5:46 pm to ThatMakesSense
I'd probably pay them 1.5 - 3 times ebitda - 3 being absolute max. Don't over pay with your heart.
Posted on 9/12/16 at 6:53 pm to reb13
Need more information. As have distribution rights that go into perpetuity for some contracts which are clear worth more than rights for 10 years.
Posted on 9/12/16 at 10:23 pm to lynxcat
Also need to understand minimum purchase agreements as well as any agreements in place with customers regarding pricing. You basically just need to do some diligence.
Posted on 9/14/16 at 5:32 pm to reb13
It would be exclusive rights, until I reach 50 accounts, then another distributor would come in and help.
Incentive to go over 49 would obviously be 0.
The products sold would be at the same rates. No counting on current accounts being transferred over. Would just have to sell myself to them, shouldn't be overtly difficult.
Currently only about 12 accounts.
Incentive to go over 49 would obviously be 0.
The products sold would be at the same rates. No counting on current accounts being transferred over. Would just have to sell myself to them, shouldn't be overtly difficult.
Currently only about 12 accounts.
Posted on 9/14/16 at 6:50 pm to ThatMakesSense
quote:
It would be exclusive rights, until I reach 50 accounts, then another distributor would come in and help.
Hmm - what if you hired someone to help you (that way not giving up rights to the other distributor)
Posted on 9/14/16 at 11:35 pm to ThatMakesSense
This sounds like a shite deal for you. You grow the business and then they get to leave you.
Posted on 9/15/16 at 8:03 am to reb13
quote:
what if you hired someone to help you
Definitely an option in my opinion. Hell, I was thinking about buying the rights, working out seller-based financing with the current distributor..hiring someone to distribute the product and taking a cut of profits to where it would still be beneficial for everyone involved. Only problem is it may be an interest of conflict with my current work.
I may have misinformed..If I were to reach 50 accounts, I would keep all of those and the manufacturer would want another associate to come in and build his own account portfolio...I wouldn't lose any of my accounts.
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