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  #1  
Old 10-15-2012, 08:08 AM
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gcbailey gcbailey is online now
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BIL got screwed...

My BIL has been in the business down in Charlotte for around 10 years now. Always considered him to be smart and do due diligence when it comes to his business. Well.... he got screwed, and hard. For some reason he just up and purchased 70 accounts from a business that was going under. Apparently only about 20% of these were under a contract and within 2 weeks of his purchase at least half of them dropped him.

I asked him why the clients dropped him, his words were basically that they still wanted their old guy. The kicker.... apparently the former LCO dropped his company, re-emerged and is now doing cash and carry and got a lot of the clients back.

I know this kind of stuff happens all the time, but never personally knew anyone that it's happened too. I guess I'm more in shock for him just to up and do such an impulse buy. I would have figured him to be the type to sit down with the guy, see what he had under contract, take it to a lawyer and see what's binding and go from there.
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Old 10-15-2012, 08:12 AM
Darryl G Darryl G is offline
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That sucks but yeah it happens all the time. That's why lawn maintenance businesses are worth little more than the value of their equipment.
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  #3  
Old 10-15-2012, 08:16 AM
ReddensLawnCare ReddensLawnCare is online now
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If you don't mind me asking who did he purchase them from. I had a guy approach me about selling 70 recently but when I looked at the numbers and lack of contracts, and the fact that he wouldn't sell a non-compete was a big red flag. You can pm me if you want
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Old 10-15-2012, 08:24 AM
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gcbailey gcbailey is online now
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Quote:
Originally Posted by ReddensLawnCare View Post
If you don't mind me asking who did he purchase them from. I had a guy approach me about selling 70 recently but when I looked at the numbers and lack of contracts, and the fact that he wouldn't sell a non-compete was a big red flag. You can pm me if you want
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I will have to ask him.... I'm not too familiar around that area, I know he lives on Starcrest Dr. and all his work is within like a 3 mile radius.... Before his purchase he had around 85 clients, a lot for a solo, in my opinion. That was another reason I wondered about the purchase in the first place, unless he was planning on hiring. So, I would guess his purchase was someone around in that area.
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Old 10-16-2012, 12:35 AM
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GreenI.A. GreenI.A. is offline
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That sucks, but I really can't feel bad for the guy. He should have had the foresight to realize the customers would only be worth anything if he could assure they would stay on the service. Next time you talk to him let him know I have a bridge for sale if he is interested.
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Old 10-16-2012, 05:52 AM
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easy-lift guy easy-lift guy is online now
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Quote:
Originally Posted by gcbailey View Post
My BIL has been in the business down in Charlotte for around 10 years now. Always considered him to be smart and do due diligence when it comes to his business. Well.... he got screwed, and hard. For some reason he just up and purchased 70 accounts from a business that was going under. Apparently only about 20% of these were under a contract and within 2 weeks of his purchase at least half of them dropped him.

I asked him why the clients dropped him, his words were basically that they still wanted their old guy. The kicker.... apparently the former LCO dropped his company, re-emerged and is now doing cash and carry and got a lot of the clients back.

I know this kind of stuff happens all the time, but never personally knew anyone that it's happened too. I guess I'm more in shock for him just to up and do such an impulse buy. I would have figured him to be the type to sit
down with the guy, see what he had under contract, take it to a lawyer and see what's binding and go from there.
Any idea on how much the cost or investment was?. Perhaps he needed a write off?
easy-lift guy
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  #7  
Old 10-16-2012, 06:42 AM
Roger Roger is offline
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Quote:
Originally Posted by gcbailey View Post
... Apparently only about 20% of these were under a contract and within 2 weeks of his purchase at least half of them dropped him.

I asked him why the clients dropped him, his words were basically that they still wanted their old guy. ....
Even if the other 80% were under contract, what would have prevented them from dropping your BIL as well?

If a customer has a contract, and decides to have somebody else to do the work, what is preventing them from doing so? If you show up, the work is done, are you doing to send an Invoice and expect to get paid?

If residential customers want the "old guy" to do their mowing, who will stop them? What is their penalty for returning to the "old guy?"
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Old 10-16-2012, 07:54 AM
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gcbailey gcbailey is online now
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Quote:
Originally Posted by GreenI.A. View Post
That sucks, but I really can't feel bad for the guy. He should have had the foresight to realize the customers would only be worth anything if he could assure they would stay on the service. Next time you talk to him let him know I have a bridge for sale if he is interested.
That's what I can't figure out about the entire thing. Like I said before he always does due diligence to the point of being anal about it. He's the type (just like his dad), who hates credit and if he doesn't have cash, doesn't want to do in debt.

@easy lift - No, I haven't talked to him yet, but I would almost bet he took the money from a CD or savings, or something and gave the guy cashiers check. He's the type who has been living on his own since he was 18, turning 40 next month....

@Roger - that's always been my fear about buying someone out. We have been approached before by LCOs and the first thing i always say is "get me your balance sheet, contracts, and let me take it to my lawyer and accountant".... never had one get back in touch.
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Old 10-16-2012, 05:29 PM
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Quote:
Originally Posted by gcbailey View Post
That's what I can't figure out about the entire thing. Like I said before he always does due diligence to the point of being anal about it. He's the type (just like his dad), who hates credit and if he doesn't have cash, doesn't want to do in debt.

@easy lift - No, I haven't talked to him yet, but I would almost bet he took the money from a CD or savings, or something and gave the guy cashiers check. He's the type who has been living on his own since he was 18, turning 40 next month....

@Roger - that's always been my fear about buying someone out. We have been approached before by LCOs and the first thing i always say is "get me your balance sheet, contracts, and let me take it to my lawyer and accountant".... never had one get back in touch.
Wow, If what you said is true, I nearly cant believe it!. I believe you, just have never heard of such a transaction taking place?. Good news is he can still write off the expense as a loss for his business. May be the only good news.
easy-lift guy
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  #10  
Old 10-16-2012, 06:00 PM
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gcbailey gcbailey is online now
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I don't know if I should post the company's name on here or not, I don't guess I will out of legal things possibly... My BIL did go talk to a lawyer, and basically got "sucks to be you". The contracts were non-binding and a non-compete clause was not signed. I guess my BIL's trusting attitude got the best of him on this one. The guy said he was retiring and getting out of the business and he assumed a handshake meant something. Guess you know what happens when you assume. He's not a member on here, nor by any means computer literate, but he said say it was alright for me to post and guess it should be a lesson for others. He paid $15k for 70 accounts and equipment.

The only positives out of the deal is a 6x10 big tex single axle, 2-21" Toro's, 36" Toro stande, and some hand held equipment..... All equipment is 3 years old or newer, so I don't know the value of the equipment, but still....
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