Accounting for unredeemed Gift Cards as Liability?
I'm under LOI for a small medspa that has significant balance on the unredeemed gifts cards as liability. Some date as far back as 5-6 years. How have others structured this into the APA?
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by a searcher
from Babson College - F.W. Olin Graduate School
in Boston, MA, USA
in Boston, MA, USA
1yr ago
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by a searcher
1yr ago
from Brigham Young University in Salt Lake City, UT, USA
from Brigham Young University in Salt Lake City, UT, USA
5-6 years old is tricky. What is the average spend per month with gift cards? Can you work backwards into typical gift card use here?
I would shoot for what is fair here backed by numbers and logic. In a perfect world, you'll ask for all the gift card revenue. The world isn't perfect and the you run the risk of the upsetting the seller.
I would shoot for what is fair here backed by numbers and logic. In a perfect world, you'll ask for all the gift card revenue. The world isn't perfect and the you run the risk of the upsetting the seller.
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by a searcher
1yr ago
from IESE Business School in Austin, TX, USA
from IESE Business School in Austin, TX, USA
Try to create an present value of the gift cards. Ask seller what % of gift cards historically are redeemed. Not 100% of gift cards are redeemed. Could go into more detail - older GCs much less likely to be redeemed - so could look at how many old / recent. Then come to an agreement on the value - make a fair offer for a reduction in purchase price or downpayment. E.g. pay for 70% of value of gift cards.
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