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Manage Your Risk When Buying ATM Locations

ATM Business — Sat, 02 Oct 2010 00:38:26 +0000

The entire atm business is one simple excel sheet with maybe 6 rows in it. That’s the case if you are just looking at the basics. When you start dealing with all the non financial variables, you’ll quickly start lowering the valuation of the deal.

In terms of maximizing the deal for the buyer AND the seller, you need to purchase routes where you are local to the area. Once you start purchasing locations that are not close, you start incurring costs of doing business that will devalue the deal for you and the buyer. What many sellers forget is that their bottom line number will be different than the buyers. If its not tilted in the buyers favor, the deal falls apart. Furthermore, in the atm business, there are naturally more potential buyers than sellers (the keyword is potential). Sometimes a simple lock on the atm (changing over manual locks to elocks for instance) can be enough to through a sale off.

At the end of the day, the buyer has the power when buying atm portfolios. The biggest mistake an ATM seller makes is simple, they never created their businesses with an exit strategy. As a result, the buyer can easily find holes that will enable him to lower the valuation, if you know where to look!

It all comes down to mitigating risk, and within the atm business (especially from the buy side), that’s my specialty!

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We can be your Vault Cash ATM Provider – if You Qualify

ATM Business — Sat, 17 Apr 2010 17:45:41 +0000

The key to growing in the atm business is simply CASH FLOW! Without it, you will be stuck with assets that you can not fill with cash. Making things worse is the inability to have access to vault cash within the atm business. That leaves many companies to only deal in local markets (to cut down on costs). Furthermore, it doesn’t allow you to grow.

One way to continue the growth is to use companies that offer vault cash services. Here’s an example:

You have an atm location that does 250 transactions a month @ $2 surcharge ($500). You pay the store owner .50 transaction ($125). Assume your buyrate is .10 and you get .30 ($75) on the backend (hopefully you are getting at least this amount, if not contact me asap so I can slap you! After that I can point you in the proper direction)

So from our example above you have a profit of $450. Now depending on your cash flow situation, you are either using your own money or borrowing it at an interest rate. Throw in time, commute costs, or even armor car costs, your profits are dwindling. Additionally, and more importantly, this is hindering your growth.

Are you an ATM Company looking to sell atm location or route?

ATM Business — Sat, 17 Apr 2010 17:36:07 +0000

A few years ago, there were many individuals and companies looking to buy atm locations. Some were new to the atm business, while others were looking to expand their existing portfolio. Problem back then, there were too many buyers, not enough sellers. Fast forward to mid April 2010, and an interesting shift has occurred.

Access to cash has dried up, causing many atm companies to freeze any sort of growth. In many instances, ATM companies needed to sell off assets and locations to continue operations. As the strong continue to hold their own, there are a select few that are looking to capitalize in the market shift.

Are you an individual with an atm location looking to sell off the location? Maybe you have a few locations that you are looking to sell? Or even a full fledged atm company that is looking to sell off a atm route. The ATM market is an extremely illiquid market these days. The key is having access to the few buyers out there in your portfolio strategy.

Given this, I propose to you the following. If you are looking to sell off one or 500 atm locations, I have an atm company HIGHLY interested on moving forward. If this is something of serious interest, feel free to contact me at below.

You will receive a reply within 24 hours. Within your reply please include a high level overview of what you are trying to accomplish (example: I want to sell off my 10 location in Chicago)

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Staying Local Will Save You in the End

ATM Business — Tue, 05 Jan 2010 03:25:05 +0000

Many times, atm companies try to expand by going beyond their immediate radius. While the intentions are great, many times in the end it doesnt become worth it.

For many, an atm location that just does 100 transaction a month isnt worth it. Unless of course you have 50 100 transaction locations all within a 10 mile radius. You can try to grow and get a 250 transaction a month location, but if your footprint is insignificant, you wind up selling the atm location (or worse yet yank the machine to not deal with the headache)..

Since most atm companies do not use armor car, you better off sticking with the local formula. Only grown beyond your radius if you have someone that is a RELIABLE tech and TRUSTWORTHY to deliver cash

Is ATM Insurance Worth It

ATM Business — Thu, 09 Jul 2009 15:18:58 +0000

As an atm owner grows, there comes a time when he needs more cash to grow. He’ll try outside investors at first, but many will eventually hit a wall. Combining this with bank funds, brings into question ” Should I be getting insurance on my cash vault”.

The one area that should be looked at is, where does most of your profit come from. If you have 100 machines, and 50% of your revenues come from 10% of your location, then you might want to heavily consider insuring that 10%. Its obvious to say that you shouldnt be insuring machines that are at the low end of your profit margins. Just dont make the mistake of putting a one month cash load on the machine (at least in areas where the risk profile is higher)!

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ATM Business for Outside Investors

ATM Business — Thu, 02 Jul 2009 13:39:41 +0000

For any atm business to flourish properly, the ATM business owner needs to have a solid understanding of cash flow and finances. In my 13 years of experience, I’ve seen TOO many atm companies with the inability to scale their growth. Why you ask? Well, many individuals that get into the atm business come from a sales background. The ability to network and provide free atm placements are a knack for some (and I’ve seen some amazing pitches occur in real time with a close – with locations that do thousands of transaction a day!). But they one part that atm owners forget is the importance of managing cash flow.

One atm machine: $2000
ATM Installation (outsource) : $350
Maintenance Call : $75
Phone Line: $20/mo

Thats about the extent of most atm owners spreadsheets. Ah… I know many of you with any sort of financial sense sees the disasters here. The cost of money… regardless of the economy, needs to heavily be thought about. If any atm needs 25k a week, you have interest cost and armor car cost. If you dont have a full grasp on these two variables, your company will not grow and survive (you will get to a point that you can not grow anymore, and for that sales guy, it will kill you personally!).

This brings me to the investment opportunity. ATM companies will offer an outside investors 15-20% returns. Now, in the present world of Madoffs, you look at that number and become skeptical. While this is smart, with some understanding of the atm business, you can see how you can mitigate this risk while earning a hefty return.

Scenario:
ABC ATM is looking to secure 100k in a cash loan @ 20%.
XYZ Investor if highly interested, but demands the following (which will help you mitigate the risk).

1. The cash can ONLY be used for vault cash purposes, not for hardware. Extremely important
(Your cash is always liquid and never tied to a depreciating asset).

2. XYZ Investor initially shout be of a portfolio that uses armor car services. Why? Accountability. Cash being delivered by armor car gives the Investor protection against internal theft (you’re dealing with cash people, and lots of it!)

3. If armor car is not an option, ask the ATM owner to provide insurance on the atm machine. Now, this is where things get tricky. While this seriously lowers the risk for the investor, its an added expense (sometimes hefty) to the atm owner. Chances are the atm owner will now do this (as from a portfolio standpoint, its actually cheaper for an atm to be stolen than insure every highly profitable machine)

4. An atm owner will ask that you keep your money with the company for X years. They will also ask to provide Y months before removing your cash. An investor will have a hard time to get around this, as the atm owner needs to know that the cash is there for him to grow. If you are ok with these types of terms, then the investment is well worth it

5. Contingency: My favorite contingency surrounds non payment. In your contract, have a clause that states if the ATM owner does not provide interest or principal payment within Z days of due date, Investor has rights to surcharge / interchange revenue. Now, not many times will this be executed, but having this as an option protects you in the future. After all, contracts are in place in the event of failure.

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Getting into the ATM Business is Easier Than Ever!

ATM Business — Fri, 30 Jan 2009 16:15:12 +0000

For all those entrpreneurial individuals that are looking to get into the atm business, the time is now! The cost of an atm machine, a new one, is less than a 2,000 (and thats for a good quality one). Interest rates are extremely low. If you’d rather not layout the capital to buy a machine, there are many companies that will allow you to lease it for less than $75 a month.

ATM Service
From a service side, there are many techs that are always looking for work (especially if you are in or near a major city). You can contact them at any time if and when an atm goes down. Their costs are significantly lower than going through a major organization.

Money for ATM Machines
Now, this is the main aspect. If you’re able to be on top of your cash flow, you can flourish in this business. In some instances, its worth tapping into your line of credit to use it as cash for the atms.

Quick Math:

250 transactions @ $2 = $500
.50 transaction paid to store owner = $100

One tech call a month
(which I divided by 2,
since its really once
every 2 months) = $50

That leaves you with a profit of $350 (not including interest charges if you are borrowing money).
That means you get the cost back of the atm machine is less than 6 months.

If you are having trouble finding atm locations, there are business out there that will secure them for you (this will of course come at a cost, and normally a hefty one). Might be something worth looking into the first atm you get.

Remember, if you build the ecosystem around you properly, you can flourish in this business

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Target Clients of Consolidated ATM Companies

ATM Business — Tue, 29 Apr 2008 12:44:05 +0000

With the massive consolidation going on within the atm industry, there now is a new avenue to increase your business. When a company is being acquired or going out of business, generally service is sacrificed. Payments get delayed to store owners, and the atm machines will be down for a longer time period than normal. As a result, you have frustrated store owners.

Given this, any smaller atm company can easily approach these store owners. Explain to them that your a much smaller company and would service their store properly since your are a smaller business. Exploit the fact that their present atm company is being acquired and is in “chaos”. Workers are leaving, management is trying to cash out. All of this leaves out the present owner.

Exploit their inefficiencies and win new accounts!

Strong Relationships Win – ATM Owner and Store Owner

ATM Business — Mon, 28 Apr 2008 18:17:14 +0000

In many cut throat markets such as Manhattan, there will always be another atm company that will promise to give the store owner a higher cut. This of course can squeeze the atm owner. Many times, regardless how good you think your contract is, there generally is a gray area that the store owner will be able to get out of it. Even if he can not, the legal headache involved may not be worth it for many atm companies.

This brings me to a very important point that is generally overlooked. The key aspect to Keeping and GROWING your atm business is the ability to keep a strong relationship with the store. If that store owner has your trust, and believes in you, there is a great chance that he would not leave you to get a different provider.

With that strong relationship, comes the ability to cross sell him additional products. The easiest part here is credit card processing.. Once he has trust in you, you can get him to convert is credit card processing to you as well. Now its not how much can you make per atm, its how much can you make per location as a whole.

If you are using your own funds within the atm machines, there are many Short Term Cash Loans that can benefit you.

ATM Business in Consolidation Phase

ATM Business — Mon, 28 Apr 2008 17:58:56 +0000

We are seeing many larger providers taking over large ATM companies. Two major ones occurred this month. One included NJ based Access to Money. $15 Million dollars to be acquired by a public company TRM. The interesting twist here is TRM is being delisted from NASDAQ. Once you are delisted, it is virtually impossible to get back on. One major item that is looked at is the existing board of directors. If management and the directors are the same people, they will never get back to NASDAQ. In my opinion, look for TRM to be bought by private equity.

On a previous note, ATM Express also got acquired by PAI. This one makes more sense. PAI cut costs with the acquistion by keeping only 85 employees. PAI now has 800 distributors and a customer base that includes more than 26,000 ATM locations and more than 35,000 credit and debit merchants.