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Buying a struggling M-PESA business
dudej
#1 Posted : Friday, October 15, 2010 2:25:14 PM
Rank: Member


Joined: 10/5/2006
Posts: 13
Guys, I am evaluating some business proposal and am wondering - How much you would pay to acquire a struggling M-PESA business with the following profile

Branch 1
Commissions Monthly Revenue Ksh 10,000
Operational Monthly Expenses Ksh 9,000
Average Transactions per Day 25
Situated in low traffic Lower Eastern(Kibwezi)

Branch 2
Commissions Monthly Revenue Ksh 17,000
Operational Monthly Expenses Ksh 15,000
Average Transactions per Day 45
Situated in medium traffic area in Nairobi

Branch 3
Not operational - supposed to be situated in medium traffic lower eastern (in the interior)

Net Assets Value = Sh 130,000

Am particularly unable to put a finger on valuation for goodwill being demanded
bartum
#2 Posted : Friday, October 15, 2010 2:32:12 PM
Rank: Veteran


Joined: 8/11/2010
Posts: 1,011
Location: nairobi
how much is the good will, do they have till/store management sim.
dudej
#3 Posted : Friday, October 15, 2010 2:45:11 PM
Rank: Member


Joined: 10/5/2006
Posts: 13
@bartum They have the store management tills. The goodwillis what the seller is putting me on hold about. I am wondering how much would be acceptable over and above the Net Value of Assets considering goodwill is a rather elusive asset to cost.
mukiha
#4 Posted : Friday, October 15, 2010 2:56:11 PM
Rank: Elder


Joined: 6/27/2008
Posts: 4,114
Even if goodwill was zero; and you paid just the 130k NAV, do you realise that at the average of 3k profit pm, it will take you close to four years to recover your investment (P/E)?

Are there other activities being carried out at the outlets, or is it just MPESA? Airtime sales?
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
muganda
#5 Posted : Friday, October 15, 2010 3:50:10 PM
Rank: Elder


Joined: 9/15/2006
Posts: 3,905
@mukiha, good point. A wise old teacher, when he let his mind wander, spoke thus: "Always find a niche and you have your business"

So in this case, where is the niche? (*even before goodwill)
And with that number of transactions, aren't barriers of entry low for potential competitors?
If the guy is a subdealer with no direct relationship with Safaricom, then goodwill should only cover the offices, or not?


But if you could get another play (property office, cyberbureau etc.) and the MPesa is side business, then many possibilities...

dudej
#6 Posted : Friday, October 15, 2010 4:34:11 PM
Rank: Member


Joined: 10/5/2006
Posts: 13
@mukiha I hear you. According to his records net cash flow from other revenue streams is negligible (revenues barely cover expenses).

@muganda the guy has a direct relationship with Safaricom. On the niche, am enticed by the prospect of healthier revenues through better outlet management and some capital infusion. Yes am considering complementary business lines.
QD
#7 Posted : Monday, October 18, 2010 3:37:03 PM
Rank: Member


Joined: 8/5/2009
Posts: 597
Hi guys am interested in buying an mpesa business or franchising one outlet from adealer who has not utilized all the three branches in Nairobi. any one with information please do advice.
The problem with the world is that the intelligent people are full of doubts while the stupid ones are full of confidence
robertyawe
#8 Posted : Monday, November 08, 2010 9:37:06 AM
Rank: New-farer


Joined: 7/20/2010
Posts: 37
Location: Nairobi
Hi,

If you are still looking to open an MPesa outlet please get intouch with me on 0722511225.

Regards

QD wrote:
Hi guys am interested in buying an mpesa business or franchising one outlet from adealer who has not utilized all the three branches in Nairobi. any one with information please do advice.

robertyawe
#9 Posted : Monday, November 08, 2010 9:41:30 AM
Rank: New-farer


Joined: 7/20/2010
Posts: 37
Location: Nairobi
Before you make the decision whether to buy or not to buy please get an understanding of how the MPesa system works.

From your postings you have limited knowledge of the MPesa business, please get familiar then you will be in a better position to analyse the opportunity.

Peculiar Kenyans skewed the model and have got mpesa working in ways that even safaricom had never imagined.

Regards

dudej wrote:
@mukiha I hear you. According to his records net cash flow from other revenue streams is negligible (revenues barely cover expenses).

@muganda the guy has a direct relationship with Safaricom. On the niche, am enticed by the prospect of healthier revenues through better outlet management and some capital infusion. Yes am considering complementary business lines.

anasazi
#10 Posted : Monday, November 08, 2010 10:17:41 AM
Rank: Veteran


Joined: 6/8/2007
Posts: 675
@robertyawe, please elaborate....
Form is temporary, class is permanent
dudej
#11 Posted : Monday, November 08, 2010 10:20:55 AM
Rank: Member


Joined: 10/5/2006
Posts: 13
robertyawe wrote:

From your postings you have limited knowledge of the MPesa business, please get familiar then you will be in a better position to analyse the opportunity.


@robertyawe thanks for the frank observation. I thought I had earned substantial understanding of how the M-PESA system works - at the agent level. Am curious - what particular misunderstanding is evident on my postings? I am keen to enrich my understanding as I analyse the prospects and you could help me by pin pointing the specific knowledge gaps you have observed.
pariah
#12 Posted : Wednesday, October 24, 2012 4:57:32 PM
Rank: Member


Joined: 11/24/2011
Posts: 833
I am taking over an mpesa shop which the owner claims is doing well but her employees were harassed because they are from an 'immigrant' tribe. I am wondering what the pitfalls are for runing an mpesa shop and special things i should pay attention to when draftin our contract.
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