selling my business

[sparcolawn]

i'm in the process of selling my business.... i've got a question about contracts though.... can you put a price on contracts, and do they simply pass on to the person that buys it?

[VMichael]

I would think that you should let the customers know your selling the business, and once you have a byer, rate them at the price that you get from them now. Once the new owner gots the business, let him meet the customers and they will see if they want to stay with him as their lawn cutter. Hope all goes well with your sell. :cool2:

[J Hisch]

If it is a business not a sole endeavor then the business has the contract not the person, so yes the contract would be worth face value.... of what is remaining to be paid on it. NO need to let customer know you sold the business. Does any other business let you know if they sale? NO the new owner just continues to run it.

[Jpocket]

If it is a business not a sole endeavor then the business has the contract not the person, so yes the contract would be worth face value.... of what is remaining to be paid on it. NO need to let customer know you sold the business. Does any other business let you know if they sale? NO the new owner just continues to run it.


Thats true, but with a smaller business, ppl are used to seein the owner every now and again, sooner or later they will wonder what happened to Bob, and whose this Jim guy?

[AAELI]

i'm in the process of selling my business.... i've got a question about contracts though.... can you put a price on contracts, and do they simply pass on to the person that buys it?

The work you have is a result of your relationship to the customer. It would be wise to inform them of the new owner/operator with a visit by both of you. Although you may think of your 'contracts' as property to sell you may find out different.

All the best in your new endeavor.

[ALarsh]

New machines and you are selling? Weren't you Clean Cut?

[GreenUtah]

so yes the contract would be worth face value.... of what is remaining to be paid on it. NO need to let customer know you sold the business. Does any other business let you know if they sale? NO the new owner just continues to run it.

Not even close. Contracts are worth their remaining PROFIT, as there certainly is a cost involved in servicing that contract. That being said, not all contracts are equal in their value either. A customer that has been with the company for ten years and is under contract for another 3 is worth far more than one who just signed this season. Not letting a customer know of changes is a huge mistake, especially for a small biz just running a couple of trucks out. There has to be a transitional period where the customer gets to see the old with the new and become accustomed to the little quirks a new owner will bring, then the old owner can slowly fade out. If your company is large enough that person to person communications with the owner have not been the norm for several years, then you could consider a more faceless transition, but I didn't see anything indicating that would be the case.

[SWD]

Contract value is dependent upon several factors, most unique to your area.
Market forces, costs, remaining life of the contract all compile to form the value.
Regarding your existing customers and contacting them, well that is up to you.
I personally, do not interact with the majority of my customers. Provided they attempt to reach me, the first stop is through my office and secretary.
I am aware of the market forces in my area as I have been approached to sell my business by several brokers, all of whom buy and sell businesses as their sole income.
I would recommend that you do some local research to determine the market forces at play in your area and base your decision accordingly.
A local Chamber of Commerce, SBA center, even the county extension agent may have useful info for you.

[rodfather]

Business Law 101 tells me that unless the contracts state in clear and concise verbage that they become automatically assumable by mutual agreement for both the new owner AND the customer, they (contracts) become null and void upon the sale of the business...someone correct me if I am wrong. I think not though. :nono:

You may have the same client, but now you have a new service provider. The equation just changed.

[PTP]

Rod is right. If they made the contract with you, then nobody in their right mind would pay money for it. However, if they made the contract with the company, then as long as the company is holding up their end of the bargain, it doesn't matter who owns it because the company that they made the contract with is still servicing their property.

[rodfather]

The most important part for both the new owner and the seller of a service business is the transition. Transition in being more than just a "Dear John" letter from the old owner to all of the customers informing them that he is getting out and someone new is taking over.

IMO, the best way to do this is to actually go around and personally introduce the new owner to each and every customer...let them know that they will continue to get the same quality customer service and satisfaction that they have had previous.

[rodfather]

Does any other business let you know if they sale? NO the new owner just continues to run it.

JH, even though it may be as simple as mowing the lawn, this a a personal service business.

It's not like your bank merging or being bought out by another. I could care less if my drug store, place I buy fuel, or supermarket were I buy groceries changes hands. Now the peson that cuts my hair, my business attorney, family physician, etc., is another story.

[mikefromny]

Now the peson that cuts my hair, my business attorney, family physician, etc., is another story.
your comparing a landscaper to a doctor? ;)

[rodfather]

your comparing a landscaper to a doctor? ;)

no, I am comparing someone who shows up each week to make my property look nice.

[thill]

We just purchased a smaller competitor and did pay a bit for their existing contracts.

We negoatiated a used equipment price and We paid the first two months revenue (paid at the end of each month) for the existing contracted clients.

I've seen several threads that mentioned two to four months.

We only lost 2 clients (of 32 "contracted by the old company) during the first two months.

Hope this helps

Tom