what % of gross paid for co.

[turf hokie]

First post but I have been reading these forums for a while. Here is what spurred me to log in

I am looking to go out on my own after years of making other people look good and making THEM great profits.
What is the dollar value placed on a fert application business these days. Keep in mind metro NY, the higher cost of EVERYTHING and nobody is a DYI anymore

Here is what I am looking at :
This company used to be a franchise years ago, similar to lawn dr or scotts. Due to a mutiny many years ago, the franchise fell apart. However, it survived locally and currently has 3 operating co's in the area (very amicably mind you) 2 in the county I wish to get into.

Here are the details

--32 year old company
--currently in 2nd generation ownership
--VERY recognizable name
--mimimal equipment
--operating as a one man show
--owner is fairly eager to get out but willing to wait for the deal he wants.
--owner is willing to hang around to ensure a comfortable transition (as part of deal, no additional compensation and willing to allow me to withhold % to ensure he responds to any needs I may have.)
--running at about a 60- 70% gross profit, without owner salary (he pulls from profit as he needs)

I am looking for some feedback on what you folks feel is a fair % for me to pay on this type of comany is it 20, 50 100%?

Any and all input is much appreciated

[Ric]

turf hokie

New York and Florida are more than just miles apart. One of the big boys in my area keeps trying to get me to sell the pest control accounts. No equipment just accounts. Last time he tried, he made an offer with another competitor to buy the rest of my business. Any way their offer is 100% years gross and this is standard here in Florida for pest control accounts. However I have heard of 1.25 of gross buy outs. Lawn service business are general 25% of a years gross.

[GLAWNLLC]

tru green chemlawn just bought out my competition for 150% on one years gross. that was just for the customer list.

[rkk95]

I have heard of Scotts paying 160%, I have never heard of chemlawn paying anywhere near that much. I know one person that sold to chemlawn and they only payed on the customers that stayed with them for at least two applications.

[turf hokie]

Sounds to me like my understanding is right in line. He wants 100% w/ minimal equipment. I have heard as high as 200% but that included warehouse space. Thanks for the input, it settled my questions with unbiased opinions.
Looks like I will be around here a little more often these days.
Thanks.

[turf hokie]

I guess the next hurdle is structuring the deal. Is it normal for most of the money to be up front? Say 50% at signing of deal, 30% at takeover and 20% held for lost accts and seller involvment ?
Thanks for the help.

[HBFOXJr]

One seller told me TG and SCotts were 70-90% of gross plus a bit of fine print. Scotts paid more, faster ansds with less hassle.

Who is the "Lawn King" dealer going out?

[turf hokie]

Harold

That's a pretty astute assessment on the Lawn King. I guess there may be some still operating in your area. How familiar are you with them? I know the owners up here pretty well as I used to run a LESCO store. Don't want to really get into which on as negotiations are still open.

[HBFOXJr]

Been there and done that in 1971 with LK. Quality operation, greedy, hard headed franchisors, but that didn't make them bad people. They were likeable. I went in in the infancy.

[DUSTYCEDAR]

how many acc are u trying to get 50,100,150? what % do u have to pay to the franchise when u take over? would u be better off just mass marketing and saveing some money with not giveing away a % to the franchise. i heard that a local company was bought out by scotts for 65cents on the dollar?

[HBFOXJr]

If it was so easy to just "market" no would would buy other companies. There is a method to the madness. I made one small buy last year and it beat "marketing" up, down and sideways.

[turf hokie]

200 + accts. It's a great foundation to start. I have family and need to have the instant income. I work fulltime for a large landscaper as his OPS MGR and trust me, there is no time to do side work, I tried, it just gets the wife really aggravated. Besides it's instant name recognition. As far as franchise fees, they don't exist anymore.The franchise went belly up with the name persisting. The guy I'm buying from took over from his father who started in 71. Apparantly the franchise was taking 10% at the time and as I said all the franchisees rebelled but it sounds like Harold has 1st hand knowledge.

[DUSTYCEDAR]

i hope the deal works out 4 u good luck

[rkk95]

how can they only have around 200 customers if they have been in buisness for 32 years? There is a company in my area that started full time in 1978 and has about 6000 customers. Scotts just offered 1.5 million to one of my competitors, he told me he generates 1 million per year. He told them he would talk to them when he gets a little older, he doesn't want to sell his job yet.

[greenworldh20]

doesn't mean you will have a million accounts. turf dude stated that the company he wants to purchase is a 'one man' show. therefore, the owner kept it small, controlled, and probably just kept the clients that would pay his price.


not bad for a business that churns out a 70% gross profit ratio.

chem companies, from what i have seen, sell for one years gross sales.

but, turfdude, remember, a business is only worth what one is willing to pay for it...if this other company has no one looking to buy him out, then don't offer him the world...this sounds weird, but offer a low number, then negoiate...you might end up saving a few pennies.

brian