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View Full Version : Buying a Business How does this price sound?


pclawncare
01-05-2007, 01:19 AM
Hey everyone ive been mowing for 6 yr have an established client base plenty of equipment and recently i have come across an oppertunity to buy another persons business. He is 65 and wants to retire. I normaly wouldnt consider buying accounts but id like to have his. We are talkin nice nice nice commercial accounts and nice residential accounts some a million dollars plus for the homes. He has been in business for years and i grew up looking up to him and admire his level of service. His name around here is like gold everyone wants him. Little background on the are prices are pretty cheap not a huge city around 50,000 pop. and cost of living is cheap prob cheaper than most of the country. Anyway if i buy his accounts and business i would be getting 23 yards he says these are the best of all the yards since he has been slowing down toward retirement he has only kept his high dollar yards. i dont know how much he makes a year off of these yards but i would guess between 40 to 45 thousand. Along with these id be getting a 2006 walker w high dump (200hr) a toro walk behind echo trimmer edger and blower. A trailer that he customised has a hytralic grass bin that dumps on its own. It doesnt load the grass but does unload it. hope that makes since. I will also get a 1976 chevy i think its a 1 ton that runs good he has been using it for yrs and said i told my wife id get a new truck when that one quits starting every morning and he said the dam thing wont die. Anyway i think thats all i am gettin besides he offered to help me out a little at first and introduce me to customers and stuff. Anyway asking price is $32,000 I think i could talk him down a little as i think it is a tad high but this is a business that has a customer base that will bring you many high dollar yards from their friends. Any way any opinions on this good bad? any specifics i should make sure are in the contract if i do buy?

carcrz
01-05-2007, 08:55 AM
Are there contracts on the accounts? If the customers were staying w/ him because of it actually being "him" doing the work, it might be important for them to not actually know that you bought it from him right off the bat. If he is willing to work w/ you for a little while & let them get used to you first.

tjcezar
01-05-2007, 09:25 AM
If there are no multi year contracts you would be crazy. Even with contracts usually people can cancell w/ 30 days notice. I do know of someone who purchased similar type business and lost their life savings because the guy he bought it from stayed in biz and just worked from home (keeping the best clients). $32,000 is a lot of money. This is one of those topics discussed here alot, so you could do a search and read some past posts. These accounts will be on the open market anyway if this guy is going out of biz, so I would come up with a creative advertising campaign to reach all 50,000 of your small town and you may get some of these clients (they will be looking for a new guy) but you may get a whole lot of other people that you would have over looked. My point sort of being you may have better chances spending less money on ad campaign and gaining more clients, possibly even the ones you would have purchased.

Precision
01-05-2007, 10:50 AM
buying the business

how much could you get for his equipment if you were forced to sell it.
2006 Walker Price new less 30-40%
stick equipment Price new less 75%
Trailer new price less 40-75% depending on condition
Truck essentially worthless maybe $500

figure that out and that is BEST case price on the equipment.

Now the accounts

typical is one months income with no contracts.
up to 3 months income with written annual contracts.

a better way to pay is based on retention (price for accts)
1/3 at purchase
1/3 at 3 months
1/3 at 6 months.

So If you agreed the accounts were worth $6000, you would pay $2000 towards the accts at purchase. If you have no lost accts after 3 months you would owe another $2000, same thing at 6 months.

if you lose 50% (based on revenue) after 3 months then your money owed ($6000) is now only $3000 and you pay him half of the remainder ($500) and he can look forward to potentially another $500 at 6 months.

I would put the money in an escrow acct so he knows it is there when the milestones are reached.

Additionally I would have a non-compete and a solo sale document set up. So he can't do ANY lawncare within the defined area of business for 1-2 years and he can't sell the business (or the contact information) to more people than you.

understand that if you pay $20,000 for his accounts and they produce $45000 of REVENUE. You will not see a profit on these accounts for quite some time. Assuming you make 10% NET profit on the accts. It will take 4 years and 5 months of work to pay off the investment of $20,000. This does not include the money you could have made if this money was invested somewhere else. Assuming an 8% annual compounded yield it would take an additional 1 year and 10 months to recoup the lost investment earning. So you would be working for 6 years and 3 months before you made any profit on these accts.

Now if he is NETTING $45,000 then things would be greatly different, but that is still how you have to do the math. Just plug in the correct numbers to see how long it would take to make a profit. Then realize you will lose some of the accts no matter what you do, and that is why your price needs to be adjusted to reflect that over time or just be lower to start with.

DEEJ
01-05-2007, 01:17 PM
Precision - excellent and very realistic post. Most don't realze how long it takes to pay back an investment like that. I think you layed it out very well.

Another factor to consider is this: Can you handle an additional 23 accounts AND provide the level of service they are used to from the ol' fella? If you can't, or even look like you can't, the customers will be dropping like flies. Some or many may drop simply because you are not the ol' fella, nothing to do with your work. If you spend your time making sure these accounts get serviced so you don't lose them, will your existing accounts suffer and start dropping like flies.

Any straight up, one time purchase fee for something like this is ludicrous. As precision stated, the purchase payments have to be based on customer retention, otherwise you can, and likely will, lose your shirt.

At $32,000 it sounds like an awesome deal for the seller, and not at all realistic for you.

Re-read Precision's post many times ...

pclawncare
01-05-2007, 01:29 PM
Thank you guys so much for you opinions and i know that i am the only one that can evaluate the situation and all the circumstances. I will consider everything and appriciate all the comments. It just gives me an opinion from a different point of view other than mine. I like the idea of 1/3+1/3+1/3 payments.I have a meeting with him today to go over all of his numbers and accounts and im sure we will start talking about price so i will bring this up. I do think i can handle 23 more accounts and provied great service. Thanks everyone any more comments are welcome

pclawncare
01-05-2007, 01:54 PM
I think he takes home around 40thousand thats after his expenses and stuff ill find out more today

Precision
01-05-2007, 05:10 PM
I think he takes home around 40thousand thats after his expenses and stuff ill find out more today

Perhaps and you did mention they were his cream accounts so that may be possible. However understand that to take home $40K even as a solo you would have to be making somewhere in the neighborhood of $75-95k in revenue. So that means he is making $3300 - 4200 per year per acct. And I would assume those numbers are low.

If they are a mix of commercial and residential that makes sense, if not, I would wonder.

Also remember that audited (meaning signed of on by a CPA) books are good at telling the truth, when backed by tax returns. If he didn't pay taxes on it, it doesn't exist. PERIOD.
And you can't pay for potential either.

Good luck.

Buying 23 quality accounts that stay with you would be a great bump up for your business. Paying way too much just isn't worth it. You have to think of it just like a mower or any other business investment. The bottom line is it has to make you money.

Duekster
01-05-2007, 06:54 PM
Get him to stay on and introduce you to the clients as his new partner. Then he can fade out. Res is kind of tricky like already mentioned.

Pay the guy in two parts based upon keeping the accounts?

hackitdown
01-05-2007, 08:40 PM
I would pay $8K or so for the equip, period. It has no special value since you can buy it anywhere, anytime.

New customers cost me about $75 each in advertising, and about 2 hours of time doing sales (max). At my best hourly rate, that makes them worth $195 each to me. Multiply 23 accounts by $195 for a total of $4,485. Besides, I would expect that several of those customers will fail to renew since you will operate in a different way than your retiring friend.

The $32K thing makes no sense in my market.

J Hisch
01-05-2007, 09:42 PM
I would offer him 25k and if 90 percent stay then pay him the remaining amount. I hear people all the time saying the accounts are worth nothing until they want to sell there business then there worth gold. I disagree accounts are worth something but only you can determine that. If he has been around a while and is willing to help you they will probably keep you. I have bought companies before and never even meet the new clients, and 90 percent stayed. They are only concerned about 2 things. 1. Is the price going to stay the same, and is it going to be good. Id go for it.... The plus side is the money generated will help pay the loan or pay you back, plus see if he is willing to carry a portion of the loan, if you have other questions PM me with your phone number.

brucec32
01-05-2007, 10:14 PM
Terms like "I THINK he TAKES HOME this or that...." won't suffice.

Does take home mean net profit? Before or after taxes? Has he paid his taxes properly in the past and can he prove it?

Can he show proof of this revenue?

Does he have any outstanding judgements against the biz? Are you buying just the assets and accounts or the whole business?

There is plenty of work to do before coming up with a price. Anyone who didn't do such work and shoots a price out to you is full of it and shows he's just whizzing in the wind.

Factor in the lost time value of the purchase price. It might be easier and cheaper to just start your own biz, pay him a little something to show you the ropes for a month, then go out and get your own accounts.

You need to know the specifics on each and every property and customer. do they pay well? What do they pay? How much work is involved on each account? Do the machines match the workload?

You could easily spend a month doing all this due dilgence stuff. After all, thousands are at stake. Then compare that work (unpaid, then you have to shell out $30K or whatever on top of that) to the simple work of starting your own biz and working it up the way you want it from nothing. You could find that much work here with nothing but newspaper ads in a year's time. My cost of obtaining each new account (averaging $1200/year) is about $30 plus time to give bids and answer questions. How many profitable months will it take you to pay back the purchase price?

Disney bought ABC and overpaid grossly. AOL and Time Warner. Daimler and Chrysler. Even with legions of accountants involved, looking under every pile of documents, it doesn't always work out.

Suggestion. See if this person would be interested in HIRING you to run all aspects of it for him in return for a salary plus bonus. He'd be paid a percentage that year or a consulting fee. That way, if it's for real, you'll know after a year. Then after that, if it works well, you agree to pay him a small residual percentage so that only if you make money does he. Most will balk at this. Becuase they see it's probably not the cash cow they're touting it to be.

Or, offer him 110% of his asking price if he agrees to accept a pro-rated percentage of what you actually collect from each of his named accounts over a period of time. This means if Mr. Green decides to mow his own property, the seller gets less in the deal. Or if Acme company decides to stiff you on $3,000, that affects his percentage too.

The present value of a stream of income is very easy to calculate. That is what you're paying for, ultimately. the key is to make sure you'll actually get that. you won't, in my experience. People who were with me for a decade before I left town for a year mostly came back a couple seasons later when I returned to the biz in their area. Maybe 20% stuck with the other guy. And that was out of a sense of loyalty which I could understand, since he hadn't done anything wrong. It's a personal business when you're solo. The new guy is just another guy. Working a year under his aegis would sure help you solidify them as customers after he's gone. But if your idea is to roll in and put $8/hr workers out there and suddenly ramp up the business, they may all cancel since they're probably used to a higher level of service and personal contact.

Dunn's
01-05-2007, 11:00 PM
So how did your meeting with him go today?

Duekster
01-05-2007, 11:08 PM
So how did your meeting with him go today?

Should change your name to Dunn Wright.

Dunn's
01-05-2007, 11:20 PM
Should change your name to Dunn Wright.

Why would we do that?

pclawncare
01-06-2007, 05:02 AM
Well the meeting went ok. We looked over all the equipment and talked about alot of stuff. He has never been sued or had any claims filed aginst his business and last season his take home was $34,200 thats after expenses and everything. brucec i already have 65 weekly accounts. I would like to expand and all of these accounts are top notch. I am buying assetts and accounts. One thing that is nice is that i had already planned and put back money to buy a brand new walker so that is 14 thousand that was going to be spend reguardless if i buy this business. I looked at his walker today i was mistaken it has 30 hours on it i befor said it had about 200 i though. The reason why i didnt know what his take home salary was because we were supposed to go over all the figures on paper today. he was not at his house when i was talking to him where he could get to them and read them off

Precision
01-06-2007, 07:35 PM
Well the meeting went ok. We looked over all the equipment and talked about alot of stuff. He has never been sued or had any claims filed aginst his business and last season his take home was $34,200 thats after expenses and everything. brucec i already have 65 weekly accounts. I would like to expand and all of these accounts are top notch. I am buying assetts and accounts. One thing that is nice is that i had already planned and put back money to buy a brand new walker so that is 14 thousand that was going to be spend reguardless if i buy this business. I looked at his walker today i was mistaken it has 30 hours on it i befor said it had about 200 i though. The reason why i didnt know what his take home salary was because we were supposed to go over all the figures on paper today. he was not at his house when i was talking to him where he could get to them and read them off
again, get audited documents and copies of tax forms and have an accountant review them. should cost about $300. Also having him remain on as an employee (while looking like you are the employee) for a few months would look good to the clients. May be dicey getting that to work.

My question on the Walker is why buy it put 30 hours on it then sell the business???

pclawncare
01-07-2007, 03:25 PM
Some health circumsatance that were un known when he purchased the walker befor have made him and his wife re concider and decided to retire and travel.

newbomb
01-07-2007, 03:54 PM
I would not buy his accounts or equipment. You already have 65 accounts and equipment. You could add 20-30 quality accounts for way less than 32K and If you need more equipment buy just what you need and have new stuff. Maybe you could buy just the clients for a much better price. Why on earth would you buy a 30 year old truck. Buy just the accounts, pro rated to the amount that stay with you. If you can use the equipment try to buy it real cheap or don't buy it at all.

Lawnworks
01-07-2007, 04:47 PM
So basically 20k for the accounts? I would offer 8-10k on the accounts and then if you need the other stuff... market value.

I don't agree w/ other people that think buying a business is for the birds. Yes advertising is great... but it takes years to get really good clientel. Chances are it might be hard to reach these customers w/ advertising... they don't sound clients looking in the newspaper ad for a lawn boy. This could be a chance to skip the bs. I would ride by every single one of them w/ him and get all of the prices vs. time. What is his man hour rate?

I feel like his price is a little unrealistic. If he balks at your offer... I don't think he will sell it anytime soon. He is not selling a business... he is selling accounts and equipment.

pclawncare
01-07-2007, 08:56 PM
These accounts are high end one of them is a state senator. Some are resturants and other things like this basicly 15 yr in the business have gotten him them. I do think it is a little high also but i dont think he will sell if he doesnt get close to it because he said you know i work about 20 hr a week and make over 34 thousand so he said i can keep going making that much or sell for that much his wife actualy thinks he needs to get more for it

Lawnworks
01-07-2007, 09:26 PM
Are they contracts? I guess if I were paying more than 8-12k I would want some assurance they would stay with me. There is always risk involved in making decent money. If they are great accounts they may be worth it... hell he might have spent a lifetime accumulating. What is the gross yearly revenue? Keep us informed... I am in a similar situation and am curious how it turns out.

pclawncare
01-07-2007, 10:20 PM
his take home is little more than 34 thousand. Like you said lawn works there is some risk involved. I am a little scared to throw that much money down, but i have already planned on spending 15 thousand on a new walker just exactly like his so, and i was already looking for another trailer so i havent made up my mind yet. They are no contracts, but most of his customers will not want to go looking for another lawn guy. They dont have time all they want is the same level of service and same price and a seemless take over. Most of these people are busy successful business people and dont have time or want to waste their time on looking and meeting with a new guy if they have one right there to take over and everyitng else will stay the same

J Hisch
01-07-2007, 11:49 PM
Nuff said, buy the guy out.. Plus if something were to go terribly wrong you would have some equipment to sell. I dont forsee you losing anyone. If this guy is willing to say this is your new guy and I feel he is capable of doing just as good of job as I did or better you will have it made in the shade.

Lawnworks
01-08-2007, 07:18 AM
his take home is little more than 34 thousand. Like you said lawn works there is some risk involved. I am a little scared to throw that much money down, but i have already planned on spending 15 thousand on a new walker just exactly like his so, and i was already looking for another trailer so i havent made up my mind yet. They are no contracts, but most of his customers will not want to go looking for another lawn guy. They dont have time all they want is the same level of service and same price and a seemless take over. Most of these people are busy successful business people and dont have time or want to waste their time on looking and meeting with a new guy if they have one right there to take over and everyitng else will stay the same


Sounds like a risk... but that is the only way to get ahead. Are you going to have to take a loan out? Is not negotiating price at all?

mrusk
01-08-2007, 11:08 AM
DO NOT BUY THIS GUYS BUSINESS!!!! Its a bad deal all the way around. Lets say the mower is worth 12 grand (i readlly have no idea how much it is worth). If you buy the business for 32k, you are spending 20k on 23 accounts!!! If you spend 20k on advertising you could easily add like 100 good accounts.

If you buy this business it will put a handicap on you. Accounts are not worth more than 1 months gross. Because anymore than one months gross it makes more sense to advertise and get them yourself.

I could careless what the guys wife thinks its worth. The old man does not have a business. He has a job! His business is worth book value for his equipment and 1 months gross for his lawns. Thats all.

pclawncare
01-08-2007, 03:22 PM
No i wont have to take out a loan, and i dont think the price is negotiable. I tried talking him down and he wont budge.

mrusk
01-08-2007, 06:05 PM
If he won't budge on price i'd walk and spend invested the 32k in your own business!

Getting 23 high end accounts ain't hard if you have money to spend on advertising!

pclawncare
01-08-2007, 06:22 PM
would everyone think it was a decent deal if i could get him down to around 25 or 27 thousand? That means id be paying around 10 thousand for the accounts. About 2 months worth of mowings maybe a week or 2 more?

Lawnworks
01-08-2007, 06:46 PM
I think 10k would be fair for the accounts. I just don't agree w/ thinking you can spend 10k on advertising and get the same results. Hell, 10k is just a yellow pages ad... and it doesn't go too far in mail outs. Then it will take 2-3 years to get real quality customers. I spend 15k-20k in advertising each year... so I have a little experience. If it is money, you can live without... I would do it. You will get a better return in the next few years than investing it in my opinion.

J Hisch
01-08-2007, 07:54 PM
Mrusk want to sell your business for one months gross? The accounts are worth it, its not 23 accounts its 35k take home......Businessmen across the goble would love to invest moeny into something and do that much revenue off the investment the first year.

pclawncare
01-09-2007, 12:11 AM
that means if i paid 27 thousand for it id get about 7 thousand profit off the business, but on the flip side i will have a brand new walker and a sweet trailer a truck and all the trimmers and everything needed to run a whole other crew. Plus i will have all the income from my original business. As i am 19 i do not have a morguage or kids or anything else besides a truck payment is about all the money im out. The next year i could easily be making 70thousand easy. That is more than my dad. 70 thousand here will buy a 1500-1700sq ft house in pretty good shape 3 bed 2 full bath with a little work to make it a nice house. 70,000 around here is a lot of money i think the average income around here is far less for 2 working parents. I think if i can get the price down a little it will be a good business move for me

Stillwater
01-09-2007, 05:22 AM
If their are no contracts binding the customers to your service then the business is only worth the current tools you have. in other words outside the value of your tools it is not worth anything not a dime zip zippo nadah nuttin.

Stillwater
01-09-2007, 05:39 AM
I personaly feel that anybody willing to shell out thousands of dollars to buy clients without contracts is just totaly insane and not responsible to yourself and famiely. I need to word that stronger, tossing thousands of dollars at the hope you will retain the current customer base is ******ed. I rather go to vegas and have fun. If their are contracts then disreguard this entire post. and take them to a lawer to verifiy.

Lawnworks
01-09-2007, 06:55 AM
about the same risks as buying stock

mrusk
01-09-2007, 09:22 AM
Your 19 and you want to do this????? It is a bad deal! Half the clients could leave you even if they tell the old man they won't!

You won't make 70k next year, because you have to make the 30k back.

10k on advertising will get you a TON of lawns! Do a mix of mailings, door hangers, and newspaper ads.

fiveoboy01
01-09-2007, 10:24 AM
I'd agree it's nuts to do this without any sort of guarantee you will retain the clients.

Even if there is a contract with the residentials, it doesn't matter. If they don't like the change, they'll just quit paying. And aside from recovering what is owed, you're not going to be able to force them to resume using your services.

25-30K, like you're looking at spending, is a TON of money. Money that can be invested back into your own business.

You said yourself he's retiring. So just wait, and see if you can pick up some of his accounts after he retires.

If you do decide to purchase this business, I suggest you get a lawyer so you don't get screwed.

Lawnworks
01-09-2007, 05:51 PM
25k includes equipment... so say 10k for the accounts... 10k is nothing... how the hell can you say he is putting his family in jepardy when you don't know his financial situation? He is not even taking out a loan. Granted if he didn't have anything left in the bank after he paid for everything... I would be uneasy.

Expecting to advertise and catch his accounts is a crapshoot.

I would wait until he wanted to bargain... I think a transition would be easier in March - April... at least from the customer retention point of view. If you can sell him on a payment plan that would be good... either that or 8-10k for accounts and market value for equipment.

pclawncare
01-09-2007, 07:16 PM
I am putting my family in jepardy? Did you read the post befor fiveoboy? I said i dont have any family. I live at home still (no cost) i am not married i dont have any kids i have money in the bank to pay for this and still be secure. The only money going out every month for bills is a truck payment and gas. O misc. items (food,insurance, other stuff) i have enough saved back that i had set aside from everything to pay my truck payment for the next year entirely and insurance. Just in case something should happen. Yes it will be around 10 for the accounts if i can talk him down. Id like to give about 8-10thousand

HenryB
01-09-2007, 07:25 PM
Mrusk want to sell your business for one months gross? The accounts are worth it, its not 23 accounts its 35k take home......Businessmen across the goble would love to invest moeny into something and do that much revenue off the investment the first year.

Very well said. Like a true businessman. Most guys in this biz are knuckleheads and sell themselves and this industry short.

HenryB
01-09-2007, 07:28 PM
25k includes equipment... so say 10k for the accounts... 10k is nothing... how the hell can you say he is putting his family in jepardy when you don't know his financial situation? He is not even taking out a loan. Granted if he didn't have anything left in the bank after he paid for everything... I would be uneasy.

Expecting to advertise and catch his accounts is a crapshoot.

I would wait until he wanted to bargain... I think a transition would be easier in March - April... at least from the customer retention point of view. If you can sell him on a payment plan that would be good... either that or 8-10k for accounts and market value for equipment.

You are probably making money and therefore see the potential in this deal. I think I would buy it

fiveoboy01
01-09-2007, 10:06 PM
I am putting my family in jepardy? Did you read the post befor fiveoboy? I said i dont have any family. I live at home still (no cost) i am not married i dont have any kids i have money in the bank to pay for this and still be secure. The only money going out every month for bills is a truck payment and gas. O misc. items (food,insurance, other stuff) i have enough saved back that i had set aside from everything to pay my truck payment for the next year entirely and insurance. Just in case something should happen. Yes it will be around 10 for the accounts if i can talk him down. Id like to give about 8-10thousand

Precisely where did I say you were jeopardizing your family?

pclawncare
01-09-2007, 10:22 PM
Im sorry for the error on my part fiveoboy no harm ment. It was a mistake on my part looking back through the post and got your name mixed with another persons thread. Sorry

Turf Dawg
01-09-2007, 11:26 PM
Just my 2 cents, but I think if you can talk to all the clients and if you do the same or better work this can work. A couple of my buds bought another guy out a couple of years ago. One bought the com., and one bought the res.. The only problem is they lost quite of few [several to me] because of service. Right now I am taking over of friend om mine who had ALL of his equipement stole. I am going to pay him 5% of the gross per month. Good luck.

pclawncare
02-02-2007, 12:48 AM
Hey its been a while since i posted on here, but i offered the guy 22k and he laughted so i walked away. FIgured everyone else would be proud on here

Lawnworks
02-02-2007, 07:48 AM
I would check back in a couple months... he probably won't be laughing then!

hackitdown
02-02-2007, 10:08 AM
Hey its been a while since i posted on here, but i offered the guy 22k and he laughted so i walked away. FIgured everyone else would be proud on here

Good work. It is only worth what it is worth. He may come around to reality. Now take your $22K and start building a business.

pclawncare
02-02-2007, 03:44 PM
Good work. It is only worth what it is worth. He may come around to reality. Now take your $22K and start building a business.

I already have a business. 65 regular customes and im a full time student i have already taken 10 grand that i was goin to invest in this business and i have invested it in mutual funds. I can make money there and not have to bust my ass for it

rotgg
02-03-2007, 02:03 AM
i would love to buy the guys business as long as he can prove what he makes per year with tax returns and he was willing to take me around to all the customers and have them sign a years contract with me i would put the money in a escrow acc and after we had all the contracts in order the money would be released to him

pclawncare
02-03-2007, 11:44 AM
Thats the biggest part of the problem. There is no paper trail at all. Nothing. No tangiable proof that is just what he told me on the income. I asked for more and he could never provide it

rotgg
02-03-2007, 03:54 PM
he will not give u his tax returns?

pclawncare
02-03-2007, 05:16 PM
I dont think he has any. I dont think he has many records at all the more i asked the more there was nothing so.

Lawnworks
02-03-2007, 05:36 PM
Dang, there is no way is business is worth what he is asking. I mean he is on the verge of being plain stupid. I can't see his accounts being worth more than 10k... maybe 5-6k. The business I am going to buy out grossed 150k last year.... a solid 100k in maintenance. I imported his quickbooks to mine(which is awesome way to analyze there business) and have all invoices, customers, everything. His man hour rate was at least 50 per man hour on all of the jobs, w/ good mark-up on materials. $35 per man hour is the going rate here, so nothing is underpriced. I am paying 13.5k for the accounts. I think this about market value for accounts.

If they can't prove anything... IMO there business is worth virtually nothing. I probably will never buy accounts w/ quickbooks proof at least not for more than 5% gross earnings.

pclawncare
02-04-2007, 01:10 AM
Ya thats why i kinda turned away from this deal. I offered him about 5 thousand for his accounts, but o well. Ill pick up a bunch on my own this year

Stillwater
02-04-2007, 11:21 AM
Oh god, Not this question again.....Unless their are transferable contracts the business is only worth the value of the equipment and Nothing More... Go Ahead Ask Any Business Lawyer.

Lawnworks
02-04-2007, 03:21 PM
Oh god, Not this question again.....Unless their are transferable contracts the business is only worth the value of the equipment and Nothing More... Go Ahead Ask Any Business Lawyer.

I don't agree w/ that statement... I mean what good is a contract anyway... I mean really... it is not binding... maybe you can fool the customer into thinking so, but the reality is that these contracts are not binding.

Stillwater
02-04-2007, 03:45 PM
[QUOTE=Lawnworks;1696699]I don't agree w/ that statement... I mean what good is a contract anyway... I mean really... it is not binding... maybe you can fool the customer into thinking so, but the reality is that these contracts are not binding.[/QUOTE


I will sell you my lawn maintenance business then, the weekly income for just the lawn mowing alone is about 5,200 (Just Mowing) it has been running since 1979. would you pay me 1000 for it? consider it a deal in a 1/2? lets say you did buy it. all I need to do is call all my clients I have been servicing for the last 27 years and tell them to tell you they don't need your service. what are my accounts worth to you then? did you waist 1000? were you ripped off... got to admit the 1000 investment for 5200 a week looks great on paper. But in reality my accounts are worth Jack ----, to you because their is nothing pinning them to you. I am totally amazed at the fact very few people understand this. But don't take my word for it ask a lawyer

Mr Priceless
02-04-2007, 04:05 PM
where in OK are you located, pclawncare?

Lawnworks
02-04-2007, 05:11 PM
[QUOTE=Lawnworks;1696699]I don't agree w/ that statement... I mean what good is a contract anyway... I mean really... it is not binding... maybe you can fool the customer into thinking so, but the reality is that these contracts are not binding.[/QUOTE


I will sell you my lawn maintenance business then, the weekly income for just the lawn mowing alone is about 5,200 (Just Mowing) it has been running since 1979. would you pay me 1000 for it? consider it a deal in a 1/2? lets say you did buy it. all I need to do is call all my clients I have been servicing for the last 27 years and tell them to tell you they don't need your service. what are my accounts worth to you then? did you waist 1000? were you ripped off... got to admit the 1000 investment for 5200 a week looks great on paper. But in reality my accounts are worth Jack ----, to you because their is nothing pinning them to you. I am totally amazed at the fact very few people understand this. But don't take my word for it ask a lawyer

I have talked to a lawyer... and I have bought a business out before. I am not a complete idiot... is it a risk? Of course it is. The business I bought last year I paid 12k for... I grossed 50k off of the accounts the next year... so it paid for itself. 10k-13k is really a drop in the bucket in the whole scheme of things... especially when I see other companies that have to have the newest toys, trucks ,etc. Just money wasted.

You do realize you get a lawyer to draft a noncompete for 2-5 years for specified area in your particular field. You can even isolate those accounts almost indefinately from the seller from ever working for them again.

And yes I would buy your business for $1000 if you could prove the work/income. $1000 is nothing... that is less than I pay per month for yellow pages.

Business aquisitions is a big part of growing a business. How in the hell do you think Brickman got so big????

lalawns2
02-04-2007, 05:41 PM
nope. not at that price.

I bought 40 lawns and a beat up open trailer for $10,000 and that was from my father. (sold trailer immediately for $400 bucks)
I was already on the jobs, clients new me well.
Clients come and go. I still have some of the accounts 6 or 7 years later, but not all, certainly. They move, situations change, etc.
his customers will likely bail on you. there is now way to pay a little now and a little later. Will you still pay if they dump you? Will this guy for-go payment because you could not retain the customer? I think not.

things to consider:
instant expansion. put my company name on the market.
instant income.
$22 grand is a lot of advertising with a $10 grand mower! in my book.
good luck, choose wisely.

Lawnworks
02-04-2007, 05:50 PM
nope. not at that price.

I bought 40 lawns and a beat up open trailer for $10,000 and that was from my father. (sold trailer immediately for $400 bucks)
I was already on the jobs, clients new me well.
Clients come and go. I still have some of the accounts 6 or 7 years later, but not all, certainly. They move, situations change, etc.
his customers will likely bail on you. there is now way to pay a little now and a little later. Will you still pay if they dump you? Will this guy for-go payment because you could not retain the customer? I think not.

things to consider:
instant expansion. put my company name on the market.
instant income.
$22 grand is a lot of advertising with a $10 grand mower! in my book.
good luck, choose wisely.

Since when did putting your name on the market become instant income?

Did you ever calculate what your return was?

lalawns2
02-04-2007, 05:58 PM
that is two seperate thoughts.
1 recognition
2 income

Doubt that I calculated return, but I grossed about $70k the first year and has climbed ever since. Was a good move for me. $32k is a lot more for what the other guy proposed.....

Lawnworks
02-04-2007, 06:09 PM
that is two seperate thoughts.
1 recognition
2 income

Doubt that I calculated return, but I grossed about $70k the first year and has climbed ever since. Was a good move for me. $32k is a lot more for what the other guy proposed.....

Well I would say it payed off for you. I think the guy wants way to much... the accounts are probably worth 10k if he had a way to prove the income and accounts.

I am just saying buying accounts is one of the easiest ways to expand. It takes years to get name recognition... and it ends up costing ALOT of money in advertising. I just don't think business aquisitions can be written off as completely stupid idea.

lalawns2
02-04-2007, 06:22 PM
here here. ( i agree) look at the numbers and then look at reality. choose wisely.

Stillwater
02-04-2007, 07:26 PM
who is brickman

Lawnworks
02-04-2007, 07:34 PM
who is brickman

They are the company driving the dark brown/light brown trucks in your town. They did 860 million last year.