buying existing accounts

[churlchurl]

I have never done this before. I have been offered a few accounts to buy, by a larger company in my area. I'm wondering what the fair market value for a maintenance account would be. I have heard people sell accounts for 3 months worth of its revenue. For example if the account was $100 it would be sold for $300. I have also heard of people selling an account for the revenue it would provide for 1 year which seems kind of high. The other question was should there be any conditions on whether the people cancel briefly after the change has been made. basically if anyone has done this how did it work for you, would you recommend it, what you would do differently, and what do you think I should do.

Thanks.

[F3Nelso]

In the past I have bought out 4-5 other lawn companies. We had a no compete with the seller/employees. Back then it was only 2.5 times the price of the cut.

I dont know what current prices are (IMO its what you two come up with and agree on), there is NO way Id pay for a full years worth of mowing, I dont care how "plum" the accounts are.

There is no gaurantee that you will keep all or any of the yards. I personally always had luck with buying out existing companies, and in fact am always looking to pick up accounts this way.


I say get together on the numbers, and go for it

[churlchurl]

thank you for the quick reply. could you elaborate on the no compete seller/employee statement? I'm not familiar with this. So the 3 times the monthly revenue would be right in there in terms of what you are used to paying.

[jinx 88]

I bought out a lawn maint. biz for the price of the lawn cutting x1month, this was without a contract on the yards. I have also heard if they already have a contract on the yard it would be x3 months. Hope this helps, good luck!

[ryry278]

Ok so i have been doing this for awhile, but for some of you guys who have bought out companies how did you approach them?? I do not want to piss anyone off

[churlchurl]

In my experience I was approached by the company selling the accounts. You guys have no Idea how much I appreciate the info I have recieved. I feel like I now have some legitamate negotiating power for this guy. I will keep you guys posted on the status and progress of the negotiating. thanks a million.:usflag:

[ryry278]

Yea lol well no one calling here and i would not mind just calling the big guys here and asking lol

[HOOLIE]

I think the value of accounts is very subjective. Since there seems to be no standard for such things, it's pretty much whatever you feel comfortable with. As far as I'm concerned, a single account is pretty worthless. A group of accounts on the same street might be worth something. An entire business is worth more perhaps. I'm OK paying for the value of one cut. If I were to pay more, they would need to all be on one street or something like that where the increased purchase price would be worth it.

My buddy buys out small companies, and he pretty much just buys their equipment and that's it. Most of the guys he buys out are looking to quit and more than happy to get 5 grand or whatever for the privilege. As these guys are looking to get out, he doesn't bother with a non-compete agreement or anything, plus they no longer have any equipment to work with anyway.

[churlchurl]

This is kind of a different situation. This company grosses about 5 million a year. They are only fasing out a few areas of where they do work.

[stroker51]

I have always heard, for a whole biz, market value of equipment and then 3x the value of one cut. Maybe more, maybe less, but at least a good starting point. Not trying to hijack the thread, but while we are on this topic, a guy in the next town over from me may be getting out for health reasons, he pretty much can't do the work anymore, and the word is he will be getting out. I really don't know this guy, but know ppl who do, which is where my info is coming from. You guys think I should just cold call him and see if he'd sell out? Not much for equip that I would really want, little trailer, older toyota tacoma, but a deere mini z and stander would be worth something. Think I ought to just knock on his door, find out how profitable the accounts are and make an offer?

[stroker51]

How well do you know this other co? The reason I ask is that maybe you can just get in on some of there call volume, say they don't want any more residential work or work in the areas you are talking about. Would they just refer the work over to you? They must like the work you do or they wouldn't have approached you.

[ryry278]

Has anybody thought about calling or done this called a local company and asked if they aer or would be willing to sell any accounts?

[stroker51]

Well, like I mentioned above, if you know the co, a lot of times, at least in my experience, I have been able to either get them to give me some jobs they don't want any more, or for them to refer new calls to me if they aren't taking on any jobs at that time or if the jobs are in an area I work and they don't. If you know anybody at the bigger co's, I think it would be a lot easier to call em up and ask.