Before you even discuss numbers I would find out if his contracts are binding should he sell his company to you. Will the current customers be willing to honor the contract for you? Will they finish out the year and re bid them?
I've tried to buy multiple companies but sellers want their money upfront and I'm not willing to take all the risk
If you want to make a deal pay him fair market value on equipment. Then maybe 30% of one year gross? I always tried to structure a deal based on who was willing to let us service their property. I would then pay him quarterly payments of a certain percentage of the gross brought in from his clients until our negotiated price was paid.