View Full Version : company for sale
03-21-2004, 07:05 PM
i have a questionfor you guys there is a company for sale in my local area that i was thinking about purchasing because there customers fit into my current routs great the company consists of 49 customers 90% of thoose are residental and about 10% comercial they have one 33in mower, which i have no idea what it is an aerator and a few handhelds trimmers and blowers they wasnt 20,000 for it and he claims off this they did 43,000 in work last year the equipment is not any concern to me i already have better equipment to take care of it i was just wondering if guys thought this was a decent deal and if you have bought other companys what did you look for when aquiring other companys lists
03-21-2004, 07:10 PM
That $43000 must be profit I hope. Price is in the ballpark I think.
03-21-2004, 07:19 PM
um i am not too sure i havent met with the guy yet i was just guessing that it was like the gross income but i am not posotive
i was deff going to try and talk him down and also see what he would take off for the equpiment because i have no real intrest in it
03-21-2004, 07:31 PM
There are PLENTY of threads on buying out someone's business. Do a search and you'll find plenty to guide you. Biggest concern is client retention. How many of his accounts will agree to someone else servicing them? What guarantee do you have that all 49 accounts won't just say no to you? It might not have anything to do with the quality of your work, but they could resent being "sold" w/o a say in the matter. He's got your 20K & you ogt his equipment that you don't need. If these accounts fit into your route, maybe advertising in this area would be a better way to build up your business. Not saying to "target' his accounts, just target the areas you want to be in. Good luck!
03-21-2004, 07:34 PM
Sounds if your giving him $20,000 for the customers for the most part. I dont think the equipment would be more than a few thousand, maybe a little more without seeing the equipment.
10 percent of what a customer will gross in a year is pretty much the standard. Up here anyway. Some people wont even give that. Some people will give 25 percent....Depends on how much the customers mean to you. There is no garantee a customer will stay with you to begin with. Its a crap shoot for the most part. If you can retain 90 percent of them your doing good.....
You stated that he grossed 43,000 last year..How much of that figure was income raised soley from these 49 accounts?
Say you offer him $3500 for the equipment an 20 percent of the customers gross. $12,000 would be on the high end. $10,000 would be a fair price...IMO
03-21-2004, 07:51 PM
I think I would have a hard time paying that kind of money for basically accounts. You would be lucky if the equipment was even worth several thousand dollars. There isn't any gaurentee that these customers will even stay with you. To big of a risk for me.
03-21-2004, 07:58 PM
I have bought out two guys in my area, one I think I paid 15% of gross plus equipment, and the other I think I paid 20-25% of gross with no equipment. I would probably pay a little more (maybe 30%) if the accounts really fit nicely into my current business. Good Luck !!
03-21-2004, 08:29 PM
Before you buy think about these questions.
Why is he selling?
What type of reputation the company have?
What happens if half of the customers quit?
Do they have written contracts on All the accounts he is selling.
If you had approximately$15,000.00 could I market your own company and sign up 50 of your own accounts. Becuse that is what you can do.
Buying the business business might just suit you. Just weight ALL your options. Think about it.
03-21-2004, 08:53 PM
green finger thanx you made alot of great points i have thought about that too like say i spent 15 on advertisemt like you said, chances are i could pick up more customers than the 50 another thing was i thought the 20 was too high so i was goin to try and work the price down and last of all i was thinking about being ok you want to sell well i will give you 25%down and the rest of the money over the course of the year so if he was at all worried about customers changing over he wouldnt sell it, that way he wouldnt have my moeny and i have nothing
03-21-2004, 09:01 PM
I f you have a good idea what area of town these accounts are concentrated in, and you would spend about 1/4 as much for concentrated advertising for the homeowners and personal sales calls for the commercial accounts in the area, you would probably pick up as much business as he is trying to sell you.
I'm not saying to "get his customer list and just try to knock him off" That would be highly unethical - and could get you justifiably shot !
What I mean is if you want more clients, for much less cost to you, you could probably pick up about the same amount of business as he is trying to sell. The customers that you develop from your increased marketing efforts are more likely going to stay with you also. His old customers are a complete crap shoot. You don't even know the quality of these 49 customers of his. Why is he leaving the business ? Are his customers ,as a group, so poor that he just can't make any money ?
His equipment is so poor that you don't even have a use for any of it ! Did you ever notice that these scrub companies with junk equipment tend to have a client list that is just as low quality ! Water seeks its own level !
03-21-2004, 09:21 PM
sam-ohio thanks a ton for your advice ya this spring we took some time and set up a real nice flyer and other hand outs and so far so good we are getting a decent response and it hasnt cost even more than a grand so i might just stick to that, one thing we did last year was once a month we would hand out flyers about 5 or 6 doors down at each of our customers houses it worked great, tons of extra work and we were already there to cut so it cost barly anything to do it
03-21-2004, 10:11 PM
he's asking way to much
03-23-2004, 10:25 PM
If you do not have experience in how to properly value a business, you should find professional help doing so. You're basically buying a future flow of profit discounted.
None of that is guaranteed and much of it will waste away with time.
If your seller cannot provide proof, such as certified accounting statements, then you're buying a pig in a poke.
03-23-2004, 11:09 PM
Good thread,I'm contemplating a buy of 30 accounts.
My thoughts at the moment are to give 15% of gross that the accounts produce till the end of august.
03-23-2004, 11:38 PM
I have a guy locally offering 90 accounts for $20,000. Statements show income in the $75k-$80k annual income. The only down side is that he has only some decent accounts, many low balled accounts, and about a 25 mile radius to work with. The guy's all over and that's a turnoff to me.
03-23-2004, 11:40 PM
Offer to pay a percentage based on monthly gross from these accounts. Pay it monthly and set a time limit of 1 year.
The equipment, even if it were great stuff, is worth no more than 15 to 20 cents on the dollar.
Anything else, an the seller is holding the money while you have only hopes of making it back.
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