Thread: Buying business
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Old 10-10-2006, 04:21 AM
huh huh is offline
LawnSite Senior Member
Join Date: Oct 2006
Location: Lubbock
Posts: 251
the very FIRST thing I would ask myself is how long have he and his father owned the second "waste disposal" company that they bought

if they bought it months ago and he continued to work until the "season" is over then I would be VERY nervous...he knows EXACTLY what the business is like just as you do....yet he will not work a deal based on how many clients stay with you when selling so soon before the season if he will sign a no compete then why the concern over customers signing a fresh contract

now if he and his father JUST bought the "refuse relocation" company I would still wonder WHY NOT SELLING ANY much equipment does he have....if just enough for taking care of his house and maybe a spare set that is one thing......but if he is loaded with equipment that is an issue to me

did you ask to buy the equipment....what did he say?

did you ask him what the plans for the equipment were?

has he offered the "business" to other LCOs that you know of?

how many clients does he have to sell you?

how long has he been servicing them?.....if just 1 or two years they would be worth a LOT less to me

what is his reputation around town....if he is top notch his clients might be more apt to stay....if he is blow-n-go I would count on them shopping around next spring

are there any other LCOs in your area you trust to ask if he has approached them...WITHOUT THEM GOING BEHIND YOU TO MAKE A DEAL WITH HIM

are you prepared to take on the amount of clients he is selling and do what it takes YOU to keep them?

do you know any of his clients to be able to say screw him I will just go make a bid to them?....since he is REALLY leaving the business

the way I would approach it is to first find out EXACTLY what he will do with the equipment....if he does not have a direct answer RUN

If he says I want to sell the equipment seperate....MAKE A GOOD OFFER THEN AND THERE ON SOME ITEMS....if he ham haws around and says he is not ready to sell it yet he is LYING

if he passes those test the next thing I would do is start talking about the no compete involving people BESIDES a lil brother or a sister or an uncle that might be waiting until he "sells the business" and they go cherry pick a few of the best with his cut rate equipment....after all it would not be HIM competing......i am sure he will say no way to this.....but if he is keeping the equipment it is not to admire and dream of his past days is for SOMEONE to use it......WHO!!!

I am sure he will say no to that and it would probably not be legally binding...but it is a way to "sniff him".....YOU could bind him to sell the equipment out of town....or state NONE of his equipment (with serial number listed) will be used on ANY of his existing clients property for 5+ years....that could be binding

if he can "pass" all of that then YOU need to use your knowledge of the industry in your area.....what is YOUR yearly turnover on clients.....what is his.....YOU KNOW SOME OF HIS WILL NOT STAY no matter what

I would be very skeptical.....and with 2-3 weeks left unless you REALLY REALLY feel some other LCOs would be chomping at the bit to BUY NOW it would be very tempting to just wait and see what happens.....I would bet you see him out there cutting again next year.....if not can you sell yourself to get his clients without buying him out?

you need to ask him a LOT more questions....and get firm answers because right now all I see is someone balking at EVERYTHING you KNOW they would ask for if they were in your shoes

hell you could even call the people him and his dad bought the "disposal" company from and ask them what type of negociators he and his dad were.....if they were cut throat and ask for a lot of no compete protections and wanted firm contracts in place for each client and low balled or offered a percentage over the year......why would they now balk at offering the same to someone else buying a SERVICE COMPANY from them

and lastly how much of a difference would adding even 50% of his clients make as far as you GROWING your business and profits.....if adding clients fast (even paying a premium) will really make a difference for your PROFITS then you need to consider it more.......maybe the money spent on AN AGRESSIVE marketing campagin will pay off as much or more....without your cash tied up over the slow winter

sounds like something to ask WAY more questions about and to wait and see what happens for 2-3 weeks....unless you really believe you need to chit or get off of the pot NOW

hope any of that helped
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