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bleabold
08-10-2004, 10:37 AM
Good morning everyone:

I found someone interested in selling an existing lawn care business. The terms of sale include all equipment required to operate the business: truck / 12' trailer /61" zero turn rider / 48" walk behind / two push mowers / trimmers & blowers. Along with 40 contracts. The customers are 60% residential and 40% commercial.

The asking price is upwards of 60k dollars. Average weekly income is over $1,500 pre week.

I would like feedback from everyone as to if this seems to good to be true, or am I just lucky to find this deal?

Is this a worth while deal that I should jump on?

ikesleeping
08-10-2004, 10:59 AM
It grosses $78,000.00 and change? What kind of truck and trailer and equipment, year ,condition,make etc. What kind of track record does the biz have? What tunover is experienced? There are some very knowlegeable people here and they will probably want, need these answers to help.

bleabold
08-10-2004, 11:08 AM
Yearly income is based on 30 cuts per year. Truck is a 94 F-250. I have not seen the equipment personally. This guy has been in business for over 15 years. Majority of customers have been with him for over 10 years.

I have an appointment this evening to look at the equipment and go over financial records.

chevyman1
08-10-2004, 11:23 AM
All that means is that 60 accounts are going to be open game soon. the ONLY way it's worth it is if the equipment is relatively new and ALL of the customers sign non-compete letters.

Black95gt
08-10-2004, 11:26 AM
It sounds like a good deal, but you have to be carefull. The equipment could be worn down or possibly defective, and the existing 40 contracts may drop you since they were paying for the previous owners service. But they all might keep you and you might get more customers and then it turns out to be a good deal. But it does sound like maybe to much money for all the equipment involved. Equipment should only be about $25,000 - $30,000, so you would be paying $30,000 for the accounts and whatever else is established.

scott's turf
08-10-2004, 11:28 AM
Originally posted by chevyman1
All that means is that 60 accounts are going to be open game soon. the ONLY way it's worth it is if the equipment is relatively new and ALL of the customers sign non-compete letters.

After you get all the customers to sign make sure you get the previous owner to sign it too :D

mastercare
08-10-2004, 11:58 AM
I have a LITTLE experience with this on a smaller scale. I had a company in college, and sold my accounts to my old boss when I graduated.....little did I know that someday I'd be cutting again and want them back!! But, that's behind us.

Here's what we did. I came up with an asking price for my entire customer list, no equipment, company shirts, logos, marketing, etc.....only customer list. I had very good retention rates..... but he was unsure of whether the customer was buying my quality work, me personally, or a combination. So, here's the agreement we came up with.

Together we wrote a letter to all of my customers telling them that I was moving into a new careeer and I'd arranged for another company (good friend.....former employer, all that good stuff) to take over their service to ensure a smooth transition...etc.etc.

Here's the deal....I recieved half the money up front, and the remaining half was paid to me at a percentage of my customers which he retained. I didn't get all of them, becuase his prices were higher, but got about 60-70% of them. So, that works about to about 85% of what I asked for the customer list. It was fair to him (less risk) and fair to me, knowing that most of my customers would take my recommendation to use this company.

I would purchaase hte customer list in the same way, especially if you're not going to "run" his company, but rather take them on as customers in your existing company. If you do the customer's list this way, then you can add the value of the equipment and come up with a fair price, that will vary based on your retention.

Hope this is helpful.

bleabold
08-10-2004, 12:38 PM
Thanks Dan,

He and I are on a similar page as you stated. I apreciate the constructive comments and insite.

bleabold
08-10-2004, 02:53 PM
I am really surprised that 112 people read this thread and I only got a handful of replies. Any and all feedback is greatly appreciated.

DennisF
08-10-2004, 03:54 PM
I would have a professional appraisal done on the equipment to find out its true value. When you buy out an existing lawn care business the only thing that you can be absolutely sure of keeping is the equipment. I wouldn't give him more than 2 months income from the existing customers since there is no guarantee that any of them will remain with you. After all, they signed a contract with him...not you. They could easily cancel and leave you high and dry. The asking amount on the total package seems quite high to me. With 60K to invest you could buy brand new gear and build your own business slowly over the course of a season or two. That's how I did it... and for a lot less money than 60K.

all degree
08-10-2004, 04:12 PM
Truck and trailer combined only worth about $5000. Lets say the remaining equipment is fairly new and its worth $12000. That leaves 43K for Blue Sky.

Thats about a years income per account. Too much. I would never pay for accounts. Its too easy to go and get them on your own.

Lots of guys on this site started with less than 10 accounts this year and have over 50 right now. In my opinion accounts are not worth anything

J-dub
08-10-2004, 04:17 PM
You may want to consult with the Small Business Administration in your area. Do a yahoo search on "Small Business Administration", find the site, and drill-down to your state/city level. Not only do they help you acquire low-cost government financing (if you need it), they also consult you on business-related issues including things like buyouts, valuations, marketing plans, and the like.

Good luck!

Trevors Lawn Care
08-10-2004, 04:21 PM
60K?!!!!!

hahaha. ROTFLMFAO

I've got about one third of that invested into my business as of today. I have more accounts, and my weekly gross is about the same as this. Sounds high to me

Trevor

chimmygew
08-10-2004, 04:37 PM
I agree with Dennis. Don't give any more than 2 months. Also, you need to wonder if he took care of his equipment and had them serviced regularly. The no compete clause is a must for the contract. Also, I would see if he would be willing to have the customers sign a new agreement before he sells, that way your locked in with them.

bleabold
08-10-2004, 06:04 PM
once again I thank all of you for your replies. I continue to learn something new everytime I am on this site. I will take all of your feedback to heart.

FYI: The price he is asking for is asking price. I have no intetion to pay that price.

DiamondintheRough
08-10-2004, 08:52 PM
I am from Allentown PA. I called about the same business. There is no way it is worth it. Nothing in contract. I think the value is closer to 40k.IMO