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View Full Version : I might be buying anothers LCO... Need input.


Primetime-SRQ
09-21-2007, 04:09 AM
Hey guys,
I was approached recently to purchase another LCO in my area.
Here is the deal, they bought all of the equipment in January from a shop with that nice little 12month no interest--NO payment. And they are needing to move about 80 miles away for family medical reasons.

Basically they are wanting me to buy the equipment for the original price they paid for the equipment and they will toss in 40 residental accounts they have for FREE. These accounts are small and only generate $100 bucks a month, but they are the small postage style lots. And they are claiming they have them in 2 clusters, and not to far apart from each other. And most of these they just gathered this year of course, hence the new equipment purchase.

Here is the equipment listing.

46" Exmark Zero Turn Lawn Mower 100hrs 19HP Kawi (2007 Model)
Echo 2 Backpack blower
Echo2 weed whips
Echo 2 edgers
Echo pole saw
Echo chain saw
Echo gas powered hedge trimmer

14' single axel lawn trailer

various hand toold,

1995 F150, 6 cyld, stick, great gas mil.

The truck, in which I don't need can be had for an extra $500.

The have the loan due for payment(s) in January. And the loan payoff is $10,500.


So, I'm thinking it is fairly a good deal, even though I don't really need any more equipment but it would be a luxury to have a backup of each plus a mower to go along with my 52" LazerHP.

This would be my first time buying another LCO biz.. But this deal seems tastyif buy the equipment and the free accounts, and yes, I may lose 20% of them but still come out ahead.

I was figuring since the equipment is used and depricated already that maybe I could squeeze them down to say $8k, plus the NO-Compete clause of course from him and his employee that he was working with him, if that is possible even..

Any input would be great... Since I am meeting them this weekend to check everything out.

And yes, I did post this on the other lawn site also for more input coverage... :drinkup:

Runner
09-21-2007, 11:36 AM
I'm sorry, but I don't see all that great of a deal, there. WHAT Echo equipment is it? Are they SRM 2400's or above, or are they the standard Home Depot 21's? Same with the blowers. The Echo pole saw...is it the extendable Power Pruner? Same goes with the edgers...(why 2 edgers - that is strange for an outfit this size). Also, the trailer is just a single axle. Bottom line, you COULD about go and buy all this stuff new for this amount. Essentially, you are buying $10,000 worth the equipment for 40 accounts that would take an entire year to pay for anyway. Don't be fooled by the "pay $100 a month" thing...because that is GROSS. If he was looking at a few thousand dollars less, it may be something to consider.

All_Toro_4ME
09-21-2007, 11:42 AM
Are you say that all 40 accounts bring in $100/month or each? Did I read that right?

Primetime-SRQ
09-21-2007, 01:17 PM
Yes--Each account brings in $100.00 Each... So it would be $4000 a month

Well , and that is why I was trying to get them down a little on the price. I ddi not getting any of the model numbers for the Echos, but since he got everything from an Exmark dealer. I was hoping they wouldn't be the Home-Depot models... But I will find out more this weekend.

JE LAWN CARE
09-21-2007, 02:29 PM
I would probably do it, It will pay for itself within 6 months I know you got other bills to pay and stuff. I would just make sure the accounts are a sure thing first.
And then I would get someone to help me.
Good luck.

All_Toro_4ME
09-21-2007, 02:39 PM
Yes--Each account brings in $100.00 Each... So it would be $4000 a month

Well , and that is why I was trying to get them down a little on the price. I ddi not getting any of the model numbers for the Echos, but since he got everything from an Exmark dealer. I was hoping they wouldn't be the Home-Depot models... But I will find out more this weekend.

100 a month for each of the accounts? Wow. What are the yards going for each cut there in FL? I've read in other posts that some charge around 7.50 -15.00 per cut. Is this about right?

Patriot Services
09-21-2007, 06:42 PM
100.00 a month for standard .20 to .25 acre homesites is about right for FL. You will get bigger accounts and some with extra services. A hundred a month is the bread and butter of residential down here, The trick is getting them close together, not too hard as the subdivisions are huge. You get a couple in one area and saturate it with hangers, flyer's and ads in the community papers. A property this size should take a solo no more than 18-20 minutes to do. A two man crew maybe 10. Good Luck!:usflag: :usflag: :usflag:

Primetime-SRQ
09-21-2007, 08:39 PM
100.00 a month for standard .20 to .25 acre homesites is about right for FL. You will get bigger accounts and some with extra services. A hundred a month is the bread and butter of residential down here, The trick is getting them close together, not too hard as the subdivisions are huge. You get a couple in one area and saturate it with hangers, flyer's and ads in the community papers. A property this size should take a solo no more than 18-20 minutes to do. A two man crew maybe 10. Good Luck!:usflag: :usflag: :usflag:

Yep.. I already have a few that are that size and it usuallt takes me about 15-16 minutes from the time the gate drops until I grab the truck keys..

And these accounts are rather close together already, and I am sure there is some room for property improvement upsell items.

SLCINC
09-21-2007, 09:13 PM
Sounds like a pretty good deal. There is good value in the 40 accounts. If they bring in $4k a month, they can be worth good money. I purchased a smaller company last yr. and paid $13k for it. It came with trailer, 60" exmark w/1500 hrs, vacuum kit, 48" walk behind, and trimmers, edgers, blowers, along with about 50 residential accounts. I broke it down to the equipment to be worth about $8-$9k, therefore I paid $4-5k for the customers. If you can pay off all equipment in one season with his customers its a pretty good deal, especially if you arent working the crew. Just some of my thoughts

Down2EarthLawns
09-21-2007, 09:23 PM
If you have the extra $, go for it. It will be a quick and easy way to expand and create that much more expansion room for you next season. Find a couple more guys during the off season and you will have 2 trucks running for the price of equipping one crew with NEW equipment. I would be all over it if rapid expansion is what you're after.

jbannick18
09-22-2007, 01:42 AM
In florida my lowest rate is 70 dollars a month, which is 20 a cut. Most houses take me 15-18 minutes by myself.

topsites
09-22-2007, 03:05 AM
Come on you guys, end the comedy please.

Hey guys,
I was approached recently to purchase another LCO in my area.
Here is the deal, they bought all of the equipment in January from a shop with that nice little 12month no interest--NO payment. And they are needing to move about 80 miles away for family medical reasons.

translation: He is going OUT of business!
He can't or doesn't want to continue.
Of course, no payments have been made.
AND the bank note has his name on it!
That's the problem.

It never ceases to amaze me...

Ok, now let me get this straight:
Brand spanking new, 1 year old business owner thinks he can get ALL his money back for everything he USED the entire season, for the same money he OWES for it. No he didn't pay for it, he signed for it, nothing's been paid and yet he wants to bargain.

Oh and of course you can have all his accounts, the same ones that evidently didn't get him through, which, they might not be worthless but I'm pretty sure they're no gold mines.

Yeah ok.

Here's the deal, it's HIS loan so here is how it works:
HE pays off the loan now, I don't care how but it has to be free and clear.
Well I don't want HIS note!
Then, offer half of retail, cash, ok, 70% if it's all in really nice shape.
And he can keep his customers because I can get a lot of advertising for 3g.

Take it or leave it.

lifetree
09-22-2007, 11:36 AM
Topsites -- If you are correct with your assessment of this situation then you are extremely perceptive ... I tip my hat off to you !!

SLCINC
09-22-2007, 12:03 PM
Come on you guys, end the comedy please.



translation: He is going OUT of business!
He can't or doesn't want to continue.
Of course, no payments have been made.
AND the bank note has his name on it!
That's the problem.

It never ceases to amaze me...

Ok, now let me get this straight:
Brand spanking new, 1 year old business owner thinks he can get ALL his money back for everything he USED the entire season, for the same money he OWES for it. No he didn't pay for it, he signed for it, nothing's been paid and yet he wants to bargain.

Oh and of course you can have all his accounts, the same ones that evidently didn't get him through, which, they might not be worthless but I'm pretty sure they're no gold mines.

Yeah ok.

Here's the deal, it's HIS loan so here is how it works:
HE pays off the loan now, I don't care how but it has to be free and clear.
Well I don't want HIS note!
Then, offer half of retail, cash, ok, 70% if it's all in really nice shape.
And he can keep his customers because I can get a lot of advertising for 3g.

Take it or leave it.

I think the best part of the deal is the 40 accounts. Yes $3000 of advertising can go a long way, but the time you spend on gaining the accounts is a factor. He can take the 40 accounts and spend some time advertising in the off season and create an additional crew to his company in very little time.

Im sure the guy spent alot of time gaining those accounts, and that time is worth something. All I know is when im ready to sell my LCO, I will be asking for much more then my equipment value, because I have spent yrs. gaining my clientele.

You should definitely pay it off in full right away, whatever the amount may be. And have it all in writing, with the non-compete clause.

NC Greenscaper
09-22-2007, 04:01 PM
I would visit all the accounts and make sure they are solid. Also, make sure they are priced correctly. What if he is losing money on the accounts and you have to try and raise the prices on them. You may end up losing more than 20%. Many of my first year customers were underpriced. Since you are buying his business, look at his books. How much net profit does he make with those accounts today. How is he depreciating this equipment. If he has used the equipment for a 1/4 of its expected life and generated a profit then its only fair that the value of the equipment be reduced by that amount.

Nicdv1
09-22-2007, 05:36 PM
hi, id check all the accounts out first, visit him on site. look at the books.is he charging $100 a month all year round? it may be on a "by the cut" during the winter so that $4000 could easy become less than half .Why would he give you $4000 a month of accounts for nothing? just for buying $10,000 of equipment?check those accounts, is there a broker involved? ask if you and him can meet up with the clients, if he is giving them away to you anyway, there should be no problems,ask clients if they would be happy for you to take over the business.if you are happy with everything ,the amount he is asking is a good deal for you,i still cant see why he would give away that amount of business, maybe thats just to make the deal look good.

Nicdv1
09-22-2007, 05:43 PM
i forgot to add that although you can get the owner to sign a non compete agreement, employees dont have to sign anything. good luck.

RegalLawnCare.Com
09-23-2007, 10:41 PM
If a deal like this came my way here in Northern Virginia I'd be very interested. It seems pretty good to me, but I'd look under the hood to make sure all is ok.

LawnMowerMan2003
09-24-2007, 02:15 AM
I've never bought accounts before but if I was offered a deal like this I would think that while the equipment is not a good deal, the 40 customers would make up for that; but like others have said, I would like to verify that by talking to each customer, and of course, make sure he is charging enough for it to be profitable for you. If I could verify that I would definitely do it, assuming I had the time in my schedule to take care of all the extra accounts.

Primetime-SRQ
09-24-2007, 06:55 AM
well----I didn't get the deal.. Someone else got there before I did.. And the guy told me that he sold everything for $15,000 (business/equipment)..

And I also got more info on the account, he only had them for about 4-8 months.. And after reviewing all of the replies I had gotten from everyone here, maybe it was better that I had not gotten this purchase any how..

Thanks guys!!!! I'll just keep chugging away at getting my own clients.