Lawn Business For Sale Question
- Asking price $50K.
- $150K gross rev this past season.
- 160 customers... (equipment for sale too but I only want customers so $20K of equipment not part of sale price)
- Last 3 yearly financial statements support income claim.
- $10K up front and remaining balance paid out via 10% of income generated by clients every quarter (season runs March to November).
Background - I have an existing lawn business that is 10 years old. This is one of my competitors.
1) It's December and the season doesn't start until March. Asking for money upfront. Should only hand over anything upon a signed legal agreement and this upfront payment occurring in the month of March/late Feb just before the season begins, correct?
2) Price per client would be $350 per customer as is - no changes. Seems high based on other posts I have seen as these are all recurring lawn and garden customers (mowing and weeding and lawn care programs). Sounds to me (from reading other posts) like I need to go through the client list and price per client should be a specific 1 month of revenue each - if that?
3) What do you think about the proposed arrangement of $10K up front and the balance being paid out via 10% of whatever his customers bring in? Likely be a few years before paid back. And I would ensure the 10% payment comes from the profit his customers bring to the table.
4) I would think that assuming 10% customer attrition upon hearing about the sale would occur. Before season begins I would like to have it be that the number of clients still engaged with the service be taken into consideration for the final sale price.
For example 50% leave right at the start of the season so overall sale price be $25K then. $10K up front and $15K paid out over time.
I would also like to have a 6 month "customer checkup".
For example, 6 months after this agreement begins should there be an additional 25% of the clients jump ship (75% of the original 160 clients have now left) leave since the season began the final sale price should be $12500. With $10K down I only owe $2500 or the seller may owe me some money since there would have been a payment issued to him in between the start of the season and this 6 month checkup.
Final analysis - $12500 for 40 clients at the 6 month mark.
What are your thoughts and feedback?