PDA

View Full Version : Buying Accounts


dustinhuck08
02-05-2010, 04:33 PM
A guy that I know is wanting to get out of the lawn care business in my area. He has some commercial and some residential accounts. What is a good figure on buying accounts I am not sure if it would be one cutting gross income or what I really have no idea. Also, I would probably be buying his equipment I don't know if this makes a difference. Thanks ahead of time for all the responses.

fl-landscapes
02-05-2010, 04:46 PM
A guy that I know is wanting to get out of the lawn care business in my area. He has some commercial and some residential accounts. What is a good figure on buying accounts I am not sure if it would be one cutting gross income or what I really have no idea. Also, I would probably be buying his equipment I don't know if this makes a difference. Thanks ahead of time for all the responses.

Your gonna get a WHOLE lot of opinions on this. But imo the best way to determine the value of a company is to multiply "owner benifits" by 1.5 to 3 times. A 2 million dollar gross sales company running on slim profit margins could be worth less than a very profitable $750,000 company. People want to (or should) want to know how long it will take to see a return on investment. By owner benifits it is their salary plus any benifits like company car, health care ect... Hope that helps.

dustinhuck08
02-05-2010, 04:51 PM
Thanks i believe that it grossed 70k or 80k last year but i do not know for sure.

Dave_005
02-05-2010, 04:51 PM
i would pay an amount equal to 3 cuttings for each account. But FIRST Talk to EACH ACCOUNT FIRST and then Pay for ONLY the ones who agree to SIGN a SERVICE AGREEMENT/CONTRACT for you to take over. or you could end up paying your friend for all the accounts and then they decide to go with some other LCO. If you buy the equipment as well it depends on the age and condition of the equipment, so make an offer for what YOU think the equipment is worth to YOU !

fl-landscapes
02-05-2010, 05:56 PM
i would pay an amount equal to 3 cuttings for each account. But FIRST Talk to EACH ACCOUNT FIRST and then Pay for ONLY the ones who agree to SIGN a SERVICE AGREEMENT/CONTRACT for you to take over. or you could end up paying your friend for all the accounts and then they decide to go with some other LCO. If you buy the equipment as well it depends on the age and condition of the equipment, so make an offer for what YOU think the equipment is worth to YOU !

not starting a disagreement but what if the per cut cost is far below what it is worth???? Thats what I mean about basing it on the profit regardless of amount of accounts. Gross 80k....so he paid himself, what? Maybe he isnt making any money and his per cut is $12 thats why he is selling....who knows. I'm just saying base it on what goes in his pocket and not what he bills.

fl-landscapes
02-05-2010, 05:58 PM
Thanks i believe that it grossed 70k or 80k last year but i do not know for sure.

dont look at gross. It means nothing. GM grossed how many billions the past couple years but they net lost billions. LOOK AT NET. Its the only thing that counts.

dustinhuck08
02-05-2010, 06:46 PM
that is very true thanks for all the great information

AzLawnMan
02-06-2010, 06:16 PM
How many commercial accounts, how many residential? How long has he been servicing these clients? Reason I ask is some guys looking to sell will boost their cliental when they get ready to sell. They will under bid to get the client and say they have lots of customers, when in fact 25% of them he got within the last month or two. Second, come up with a price. Ask him what he wants and then do some research. Make a counter offer and go from there. Then make sure you have a "no compete" clause in your contract. Meaning he cannot start another company for x-amount of time. Then after you decide which customers will stay, pay him a small percentage of the final asking price, and after 3 months another percentage for the customers who have stayed on with you. Try and spread this out as long as possible, it will only benefit you. This is business not friendship. You also want to see certified tax returns from himself as well as the company. What is he asking for the company?

zimmerwerks
02-07-2010, 11:16 PM
last year I purchased over 40 accts. Paying the seller half of what they generated in mowing in a season. This may seem alot, however I'm in a pretty competitive area.and had no money up front to buy them, so I mowed his lawns under the table to "pay" for mine.they were payed off at the end of the season and after the initial investment of about $5000 in equipment. now I own it all free and clear and will make over 7k a month (gross). these were accts he had for 10 plus years. all small so I'm in and out fast. they love my work and refer me to neighbors and friends. I'll continue to buy more accts. this way from him this year as I'm currently @ 54 accts and am shooting for 100.

xclusive
02-07-2010, 11:22 PM
How many commercial accounts, how many residential? How long has he been servicing these clients? Reason I ask is some guys looking to sell will boost their cliental when they get ready to sell. They will under bid to get the client and say they have lots of customers, when in fact 25% of them he got within the last month or two. Second, come up with a price. Ask him what he wants and then do some research. Make a counter offer and go from there. Then make sure you have a "no compete" clause in your contract. Meaning he cannot start another company for x-amount of time. Then after you decide which customers will stay, pay him a small percentage of the final asking price, and after 3 months another percentage for the customers who have stayed on with you. Try and spread this out as long as possible, it will only benefit you. This is business not friendship. You also want to see certified tax returns from himself as well as the company. What is he asking for the company?

Wow that is some really good advice!!

froglawn
02-09-2010, 05:47 PM
i agree...make sure he has a GOOD client base

N.H.BOY
02-09-2010, 08:31 PM
IMO I would only look at it if he has been in business for more that 5 plus years. One or two months of mowing for the accounts. Mowing- not fall or spring cleanups.

zimmerwerks
02-10-2010, 09:27 PM
Yeah, one of my conditions was the only thing that was "bought" was the mowing. Powerrakes, leaves, ferts, and what ever went to me. Hindsite being 20/20, I did',nt stipulate snowremoval and he kept those accts. That maybe something to remember. One great condition was that I was able to return acouple that did'nt work out for me and also didnt have to pay for two that dropped me. good luck out there!

Millers Lawn Care
02-11-2010, 12:37 AM
How many commercial accounts, how many residential? How long has he been servicing these clients? Reason I ask is some guys looking to sell will boost their cliental when they get ready to sell. They will under bid to get the client and say they have lots of customers, when in fact 25% of them he got within the last month or two. Second, come up with a price. Ask him what he wants and then do some research. Make a counter offer and go from there. Then make sure you have a "no compete" clause in your contract. Meaning he cannot start another company for x-amount of time. Then after you decide which customers will stay, pay him a small percentage of the final asking price, and after 3 months another percentage for the customers who have stayed on with you. Try and spread this out as long as possible, it will only benefit you. This is business not friendship. You also want to see certified tax returns from himself as well as the company. What is he asking for the company?

Ya, some good advice but I wouldn't sell to someone like that! I bought a business & paid roughly 3 mo. gross up front with no contracts with the customers- just word of mouth & doing a great job for them. Then I sold several years later doing the exact same thing- all money up front & no contracts. Why would I want to hold the bag for someone & then if they do a poor job & loose customers, it comes out of what he pays me?? Don't make much sense to me. No compete is a good idea, I'd say.

zimmerwerks
02-11-2010, 04:50 PM
Yeah, I was fortunate with the situation that I did not have to pay for accts. that dropped me. I personally wouldn't offer that. We had an agreement before the accts changed hands because I was wary as there were a few houses for sale on the accts and he knew there were a few trouble accts...some of what he saw as trouble I did not...It worked out for buyer,seller and customer in the end...a new guy eager to please and succeed.

JD71
02-14-2010, 11:24 PM
I just bought 45 accounts 2 weeks ago and I paid 2.5 mows per yard and I also made the guy sign a 3 yr non-compete and I paid him 10% up front and we went out together and personally met each customer to insure that I would keep them as clients and we had a retention rate set aside at 80% and anything below the 80% I deducted $75 per account off of the amount that I owe him. We visited veryone and out of 45 accounts I have kept 40 of them so I consider it a good investment so far

FourTrees
02-15-2010, 02:16 PM
8% of income from properties for one year. They don't pay or were lowballed, you only pay what you get. This way you will only ever have to pay if you are making money from them. Buying clients can be risky for you he has to understand this), but worth it. Remember he is the one getting out not you, you are doing him a favor as he would get nothing if he just walked away. You gain clients and that helps you, but you cover yourself by only paying a percentage and cover yourself for unknowns.

As for equipment price it out individually buy what you need then offer to take rest at a discount as it is stuff you do not really need, but might come in handy.