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View Full Version : What You Can Sell Your Business For......


JimLewis
10-09-2004, 08:10 PM
In the newspaper I saw an add for a "landscaping liquidation sale" today. I decided to go check it out. The guy had all sorts of stuff for sale - hundreds of items. Mowers, blowers, trimmers, hedge trimmers, irrigation stuff, tools, power tools, you name it. Great sale. My friends and I got some excellent deals on some good stuff. I bought about $600 worth of tools and equipment for about $125.

I asked him why he was going out of business. He said he sold his "book of clients" to TruGreen ChemLawn. They didn't buy the equipment he had. But they bought his clientele from him. He said he had about 96 customers. I don't know if that was commercial or residential. Based on the equipment I saw (21" mowers, nothing big) he was doing residential. He seemed happy with the deal he got. They also hired him on their staff full-time, which was a very wise move on their part since he's licensed and it's very hard to get licensed in Oregon. And in order for a company to be licensed, they must employ at least one licensed contractor. So the more they have on staff, the more secure they are.

Anyway, I asked him what he got for his "book of clients" and he said they gave him 15% of his annual gross sales.

IMO, that's not very much. Not worth it for me. But apparently, to him, it was worth it.

Anyway, just wanted you guys to know what kind of money you can get from TGCL if you ever want to sell out to them.

specialtylc
10-09-2004, 08:28 PM
Residentials are probably not worth more than 15%.

Kelly's Landscaping
10-09-2004, 09:09 PM
Ouch what made him take that did he go looking to sell or did they come to him. It just does not sound like it was worth it perhaps he's one of those guys that cannot take the stress and instead of the freedom we have he saw only problems and aggravation. You either love being your own boss or you hate it there is no in-between I for one know there is no going back I will never punch a clock for someone again.

kris
10-09-2004, 09:16 PM
I think it's more than fair.

10% is more in line.

Mueller Landscape Inc
10-09-2004, 09:44 PM
The last time I bought someone out I paid 3 times the monthly rate. That was in 1991. The guy had 30 or 40 accounts, I can't remember. No contracts just "goodwill" accounts.

I would think that businesses that are more of a "turn key" situation are worth a lot more, depending on how much the owner is involved personally with the customers.

rodfather
10-09-2004, 09:51 PM
15% huh? See ya...I'm with you Jim

hoyboy
10-09-2004, 10:11 PM
It's all in the pricing. Let's say one guy (A) has an account that he gets $50 gross and out of that he nets $10. Another guy(B) has an identical account, but he's able to get $60 for it, thus netting him $20. If someone was willing to pay 15% for A's account, what is B's worth? I'd say at least 30%, but upwards of 50% considering the second $10 of profit was received without lifting a finger, whereas the first $10 profit took $40 to get.

Dan

Kelly's Landscaping
10-09-2004, 10:22 PM
My worst day ever working for my self is still better then my best day ever working for someone else. It is better to rule in hell then to serve in heaven. I guess selling out isn't in my future.

Mueller Landscape Inc
10-09-2004, 10:30 PM
My worst day ever working for my self is still better then my best day ever working for someone else. It is better to rule in hell then to serve in heaven. I guess selling out isn't in my future.
Yes lol! I've been doing this so long that I KNOW I couldn't work for someone else. Though sometimes I feel like I'm working for the government!

Tider6972
10-10-2004, 02:31 AM
That's ~five weeks gross. Pretty close to the 6 weeks factor that most on here *used* to consider fair.

GroundKprs
10-10-2004, 04:08 AM
Can't use the info from this to value your own business. If he got 15% of gross annual sales from TGCL, was his application business 15% of his gross sales? Or was applications 5%? or 35%? Because in most areas the going rate for application clients is one year's sales.

Total business will be valued by roughly 100% of application annual sales, and 10-20% of maintenence (mowing, etc.) sales.

Soupy
10-10-2004, 04:47 AM
I wouldn't take the 15%, but for a new business that isn't showing a profit, it isn't to bad. I might just blanket my area with the cheap price fliers and then turn around and sell all their customers back to them :p

Doh!
10-10-2004, 08:37 AM
What about when time to liquidate is a factor. I plan to dissolve at the end of the season. I don't do any fertilizing, just mowing and landscape, but if I don't get anything for my accounts there will still be someone else servicing them. The residentials that I mow could fill a filing cabinet with all the door hangers and fliers they get.

For me to accept 10 to 15% on the one hand is pretty insulting considering all the work I've done, but realistically I don't plan on being there next season anyway. I would take the deal but I wouldn't be bragging about it.