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Old 02-06-2013, 10:01 PM
danillac danillac is offline
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Join Date: Feb 2013
Location: chaska mn 55318
Posts: 10
should I buy this business for $60,000

Equipment total is $37,000.
2003 60" ex mark rider
2004 60" ex mark rider
2010 60" ex mark rider
2004 44" toro walk behind
Small toro push mower
2 echo weed whips almost new
2 echo backpack blowers almost new
200 gallon lesco liquid sprayer with 200' hose
20' open lawn trailer with gas tank holders, blower holders and weed whip holders
2003 f350 crew cab 130'000 miles, great truck.
boss v-plow
All of his lawn care accounts (24) that totalled a little over $100,000 last year. All are in a pretty close radius. 5 or 6 businesses, 5 or 6 townhomes and apartments, and 12 residential. He had one main employee that makes $17/hr, $25,000 total last year. another I would replacef with myself.
How often do prior accounts that signed contracts with old owner re-sign with new owner? I look at that as the main variable that makes this worth it or not. He would keep the "Lawn" in his "Lawn and Landscape" name and pass all Lawncare stuff to me. He wants the Landscape business and masonry. I should Probably offer him $50,000 max is what I am thinking?
Any other experience with buying pre existing businesses out there?
He says he is selling to concentrate on landscaping and masonry and would tell accounts that employees are taking over so service would be the same as it always has been.
Thoughts? I am in Minnesota so we mow May-October. contracts are for April - November, with some plow accounts
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Old 02-06-2013, 11:30 PM
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ETPRO ETPRO is offline
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Location: Pittsburg, TX
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Sounds like a pretty good deal to me. Haven't personally purchased an existing business, but have been contacted in regards to purchasing an existing business. Tip: Spend $300 get an attorney to draw up some paperwork stating the seller must abide by a 5 year non-competition clause. It would suck for him to open back up into lawn care next year and siphon your customers away from you.

As far as the customers, I would first make sure he has the jobs priced right, to see if they are worth keeping. (Which off of your gross numbers sounds like they probably are.) And then make sure the accounts are secure. If you are purchasing "accounts" they better be on paper and contractually held. If it is a verbal agreement, I don't see that there is anything to purchase. GET IT IN WRITING. Again, when it comes to accounts, there is nothing to buy if it is not in writing. Protects you and them.
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Old 02-06-2013, 11:31 PM
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ETPRO ETPRO is offline
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I also might add, there is probably quite a bit more that an attorney would advise to go into such paperwork.
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Old 02-07-2013, 09:53 AM
roeslandscaping roeslandscaping is offline
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Join Date: Dec 2011
Location: Bristol Tenn.
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They way i look at, from my mistakes in the past, is to buy the equipment. Dont pay for the accounts right away. Because you arent promised the lawns. If you get the lawns he offers, i would pay him a certain percent for the first month. I Just recently bought a snow removal business, and i paid for the equipment and nothing else. I told him that if i get the accounts, he can have 25% of what I make from those accounts the first year.
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Old 02-09-2013, 09:16 AM
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clydebusa clydebusa is offline
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Location: Tulsa Oklahoma
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Quote:
Originally Posted by roeslandscaping View Post
They way i look at, from my mistakes in the past, is to buy the equipment. Dont pay for the accounts right away. Because you arent promised the lawns. If you get the lawns he offers, i would pay him a certain percent for the first month. I Just recently bought a snow removal business, and i paid for the equipment and nothing else. I told him that if i get the accounts, he can have 25% of what I make from those accounts the first year.
This is what I do also.
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  #6  
Old 02-09-2013, 09:25 AM
dnc19694339 dnc19694339 is offline
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equipment + 1 months earnings is a great deal for the buyer.
Not so much for the seller.

I dont know about you guys but I would NEVER sell my accounts for 1 months earnings. Just my opinion but I think that is ridiculously cheap!!

I have bought out 3 competitors in the past 10 yrs. I paid around 2 months earnings for two of the biz and 3 times for another and I still think these were cheap, I would buy them all day long at that price!
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  #7  
Old 02-09-2013, 09:50 AM
djagusch djagusch is online now
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Location: MN
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Quote:
Originally Posted by dnc19694339 View Post
equipment + 1 months earnings is a great deal for the buyer.
Not so much for the seller.

I dont know about you guys but I would NEVER sell my accounts for 1 months earnings. Just my opinion but I think that is ridiculously cheap!!

I have bought out 3 competitors in the past 10 yrs. I paid around 2 months earnings for two of the biz and 3 times for another and I still think these were cheap, I would buy them all day long at that price!
True to a point.

You as a seller don't want to sell so you would want higher dollar. If a seller wants out then he is going to take what is offered, unless he wants to keep them. The buyer wants to offer just enough for the guy to sell, not any more.

Other thing is in this case the buyer has no other accounts to help spread the cost of the loan or been in the biz to be most efficent. He's going to be paying $600 plus a month for the orginal $40k loan for the next 5 yrs which is going to be a major drag on the company until its paid. The equipment will need major repairs or replacement over the 5yrs which will be hard to keep up with.

Best case senerio would be buy it see sales double and then should be able to get out of the hole. I just see the loan and the buyer being used to $40k income (his current job) having a hard time being net positive especially if he keeps the employee around for $17/hr.
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  #8  
Old 02-09-2013, 10:37 AM
danillac danillac is offline
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Location: chaska mn 55318
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what part of the country do you operate out of?
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  #9  
Old 02-07-2013, 10:13 AM
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ETPRO ETPRO is offline
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Location: Pittsburg, TX
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That sounds like the way to go. Don't know if I could part with 25%. Hope that is just returning accounts. Still make sure he has a non comp clause if you are going to give him a commission of what you did, you don't want him double dipping.
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  #10  
Old 02-07-2013, 10:30 AM
larryinalabama larryinalabama is online now
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Location: Ragland Al
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Id offer him 37000$, and go from there. Id bet he would take 47000$
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