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View Full Version : Formula for selling a haunt?



SpFXChic
01-30-2007, 10:57 AM
I've never been in a situation of selling a haunt, and I'm not sure if any of you have been either. But on behalf of a co-worker, I pose this question...is there a formula or a certain way to sell a haunt? What do you factor in to the price (equipment, props, animatronics, security devices, walls, tools, office equipment, etc.)? How would you determine your selling price?

Do you use a formula to determine the price of individual (or a group of) items and then add that all up? Obviously, you won't be charging for what the items would cost new if they are used.

I'm sure that it probably varies based on other multiple factors, etc., but even a little basic help would be greatly appreciated. I wouldn't even know where to begin...except to ask all of you!

If you don't feel comfortable posting a reply here, feel free to PM me. I can also try to get more specific info if that would be beneficial.

Thanks, in advance!
Janine

Raycliff Manor
01-30-2007, 11:19 AM
Hi Janine. This is a very tricky question and, as you guessed, there are many variables to be considered when selling a business. Some of these are as follows:

Is the property and/or building included in the sale?
Will the attraction remain operational in the same location?
Are onlly the walls, props and equipment being sold?

Of course, the best case scenario when selling a business is to sell it as an operational business. That is if it has experienced a successful run. Unfortunately, if it would be a liquidation sale the sale price would be for pennies on the invested dollar. The best way to go if this is the case is to contact an auction company and let them promote an auction and get a lot of haunt enthusiasts into a competitive bidding situation. I hope I never have to address this topic from personal experience unless I'm selling the old attraction to make way for a brand new one! :wink:

I know that I haven't helped much, but you might pose the questions above to your friend for consideration.

Kel

SpFXChic
01-30-2007, 12:21 PM
Ok, I spoke with her and she said that it would be sold as an operational business, that would include a tent and a building (the previous property was leased, but would be available to prospective buyers), plus storage trailers, equipment, etc. Basically, they could take what they are sold and with their own tools, put that show together and run it that season.

She also mentioned that the business is well-established and is quite reputable. Would that make any difference when considering a selling price?

Thank you for mentioning those points, Kel. Again, I appreciate everyone's input!

J

Duke of Darkness
01-30-2007, 12:48 PM
There are formulas for determining the price of a business. Unfortunately, those formulas are very industry specific, and to my knowledge, there is no set formula for the haunt industry. Even for industries that do have established pricing formulas, they are only a starting point, and the final price can be very subjective.

A formula borrowed from the retail industry that might serve as a starting point for determining the price is Previous year's annual profit + current market value of props and equipment = sales price. There are many factors, including condition of props, training and assistance, inventory, and community good will, which could raise or lower the price from there.

The bottom line is, that there is no right answer. While formulas such as the ones above are a good place to start, the only thing that matters is what a buyer is willing to pay and what your friend is willing to part with it for.

I know that is of limited help, but price really is a very subjective thing in many ways.

Dave

SpFXChic
01-30-2007, 04:28 PM
A formula borrowed from the retail industry that might serve as a starting point for determining the price is Previous year's annual profit + current market value of props and equipment = sales price. There are many factors, including condition of props, training and assistance, inventory, and community good will, which could raise or lower the price from there.

The bottom line is, that there is no right answer. While formulas such as the ones above are a good place to start, the only thing that matters is what a buyer is willing to pay and what your friend is willing to part with it for.

I know that is of limited help, but price really is a very subjective thing in many ways.

Dave

Thanks for your help, Dave! I will pass that info along! Anyone else? Keep it coming!

J

Jim Warfield
01-31-2007, 12:14 AM
Remember the old show called something like "Race Of Champions?"
Identicle race cars with all the most talented drivers racing to see who is the best on driver's talent alone(since the cars are all the same)
Have a pile of haunted props then give 20 haunters each a chance to make a decent show out of them, video each show. How different would they be? How successful would any of them be with the general public?
I think there may be some tremendous differences in the end result.
So selling that pile of stuff, what is it worth?
It all depends upon what talent and experience is brought to bare on it.
The famous artist's paint brush made the painting but without the artist , the paint brush just lays there waiting for the rats to eat it.
There were no paintings locked up inside the brush. The paintings were locked up inside the brain and emotions of the artist.

Greg Chrise
01-31-2007, 12:31 AM
So not having a painting to sell, the artist still needed to eat and so he used the brushes as sticks for rat-Ka-bob. And bob wasn't too happy about it.

Jim Warfield
01-31-2007, 12:39 AM
Actually having live paint on your brush is very over-rated and abit passe.
Air-guitar? Air painting!!!
Air face painting, dairy-aire painting (in the milk barn?)
"Keep working the brush! Work it! Work it! Don't stop until you have slid all the face's blackheads and pimples into those wrinkle-ditches, then smooth everything over, face land-fill! We begin building a condo ontop of this tommorrow, we will have nice parks and playgrounds, further downstream a nice industrial park, then the sludge pit below that, everything simply drops right down out of sight, right onto the underware trampoline!"

drfrightner
01-31-2007, 01:56 AM
If you're trying to sell a used one, and you want to sell it as one unit sell it cheap if you want to sell it fast.

If you go through the place and go well I paid 2500 for that and 4000 for this, blah, blah you'll never sell the thing.

People look for good deal when spending their money...in the end remember you already made money from this equipment, you must factor that in and price accordingly.

The lower the price the fast it sells. When you look at overpriced stuff in Haunted Attraction magazine, it always seems to be listed magazine after magazines doesn't it? Its overpriced.

Price it to sell, price it for what you really want to get for it.

Larry

Jim Warfield
01-31-2007, 09:43 AM
Have an auction, you only need two people who want the items to make money. (Hasn't this happened over the last few years at haunted auctions?)
I am no farmer, I live in a farming community. 35 years ago a young farmer was in a store asking the opinion of an old farmer if he should sell his soy beans yet or not?
Soy beans had jumped up to $3.75 a bushel! Higher than they had been , ever!
The old farmer said he wasn't selling yet.
The young farmer sold his beans, the old farmer sold his beans a month later for over $11.00 a bushel!
You never know?

SpFXChic
01-31-2007, 10:25 AM
Thanks for the advice (everyone) and the laughs (Jim and Greg). I've been passing all of the info on to her as it gets posted. She's very grateful for all of your help.

Hopefully I can convince her to register here once her PC is up and running again.

Raycliff Manor
01-31-2007, 11:07 AM
When we talked to our CPA and our loan officer about establishing a value on our haunted attraction business, for the purpose of establishing a stock value, we were told that the resale value could be anywhere from the previous year's annual profit + current sale value of props and equipment in their used condition, which is pretty much what DoD said, to three to four times the annual gross revenue of the most recent year. Of course, the sale in either case would be for a haunt in which the building and land are not included in the sale price. We were, however, cautioned that there is no real basis for this formula since neither the CPA nor our loan officer have any historical data regarding the sale of haunted attractions. They were primarily using formulas that have been in used in the sale of other types of businesses. Hope that helps. :wink:

Kel

SpFXChic
01-31-2007, 01:23 PM
It does help, Kel! Thanks! I'll pass it on!

Duke of Darkness
01-31-2007, 02:06 PM
It is very hard to find a viable formula for a small industry. It is much harder in an industry like this one, because the majority of the time when haunts are sold it is the walls, props, and equipment that are sold rather than an ongoing business.

Several people suggested selling cheap or having an auction. This is often going to be the only way to move the physical haunt. The value is higher as an ongoing business, but as Jim pointed out, only a haunter could run it in a that would maintain that value.

The two things that bring value to selling it as an ongoing concern are the lease (there is little value other than the equipment if it can't stay in the same location) and goodwill. Basically the idea that people will come back next year because they had a good time there last year.

It may well be that the best place to find a buyer in that kind of situation is among one's employees and/or volunteers. They have an idea of how things have -- and should -- be run. An option to consider is to become a "silent partner" in the haunt, selling it for a higher price but being paid out of proceeds of the haunt over several years. Only a good option if you really believe the buyer can make a go of it, and important file a UCC lien on all the equipment until everything is paid off.

Anyway, I know that much of that is beyond the scope of the original question, so I will shut up and stop rambling now.

Dave

BTW Kel -- Glad you hear your CPA agreed with me. :D

Greg Chrise
01-31-2007, 02:57 PM
I think what kills a lot of sales is the distances one must go to pick up your new purchase and freight on buyer. If possible the best thing would be to solicit more local porential buyers and operators.

Larry is right about some money has been made on the haunt thus far. Many sell for back storage fees and debts of other natures alone. Like a 400 panel haunt for 10,000 and then turning around and liquidating the high dollar sound equipment.

Buying a lot of stuff means having even more bucks for the labor to go load it up, transport it and store it once it is home. The only people that have this on a ready basis already have a similar business and intrest.

Certainly if it was for sale for $500 someone will be there next weekend. If it is $10,000 there might only be one person in 500 miles capable of writing a check. If it is $20,000 it may take 1.5 years to find the right buyer. If it is $65,000 it will never actually be purchased but it might be rented out occasionally to different start ups. This later suggestion does not necessarily mean you will make any money as it is realtive to each market and cash to advertise. If they had cash to begin with they would have built a new haunt. You have actually witnessed the same haunts for sale for over a decade and never sold, just found temporary operators like a used car lot and repo deal. Not a happy way to live.

If it is $7500 and a new operator can pay over years one might do better than just give it to a good home.

It comes down to giving someone else a winning opportunity and that is relative to the condition and quality of the offering. This is either making someone very happy that you set them up in business or someone genuinely wanted to add to their existing attraction and had the bucks to do it. It was less expensinve and quicker than building new, the condition was such that it would last a few years, the accompanying equipment is not antiquated.

Sometimes it is cheaper to take it or portions of it to the land fill. Being able to see well used stuff as having potential also requires some experienced potential buyer. If everything is primo and was quality built it certainly has some value and should be listed as such and put out on all the free listings.