Purchasing Customers - Pointers needed

[GreenCare Consulting]

Green,

I would think that given the numbers you presented, this would be a good opportunity (not great, but very good). I think you can realistically forecast to lose at least 10% of the customers, but that is also normal. If you can, I would try to structure the deal so that you can give him a % up front, and then pay the remaining percentage each time you run an app. that way the accounts will help to pay for themselves and then next year you will be making more $$$. Also, I would tie in a non-compete clause and a reduction in payment to him if more than a certain percentage that you both agree on cancel. Typically, however, the seller is only responsible for one application after the sale.

I would make sure you have the time to absorb all the accounts and I would also be sure I talked to all of them. If the seller will take you around and introduce you to each customer (or as many as possible) that will really help the sale. Finally, I would "merge" the companies, not just a straight buyout.

Just my $0.02.

Good Luck!

GC

Ric--As always, sage advice!

[teejet]

Keep this in mind. If you are advertizing in the area he works, and he quits you will probably pick up half the customers anyway.

[mikesturf]

Originally Posted by teejet

Keep this in mind. If you are advertizing in the area he works, and he quits you will probably pick up half the customers anyway.

Good point.

Also, just because he is asking $40,000, you don't have to pay $40,000. Time is running out for him, offer him something lower. Explain you don't want the farther away customers, etc., etc. You are in the driver's seat.

[Ric]

YO GUYS

When you talk about beat down the price for a business, You are beat down the value of your own business.