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Boss is selling out, is the price right?

10K views 47 replies 26 participants last post by  dnc19694339 
#1 ·
Hey yall,

I was looking for some insight from somebody who knows the business better than I do. My boss has decided to sell out and he is giving me first shot at the company. I was just looking for a second opinion, heres how the numbers break down...its roughly 150 accounts with about $10k per month in regular maintenance during the season, $20k in fertilizer/chemical, plus some xmas lighting, tree jobs, and fall clean ups. He is asking $17k, didnt sound bad to me but I havent been down this road before, any input is appreciated.
 
#31 ·
AH. ok. looks better then.

price sounds well. would be wroth a couple hundred to have a lawyer write up a contract then. he will think of things we wont neccessaraly know. but as mentioned before. using the company name so customers wont know the change. and no compete. he may find his new venture isnt making money and he wants to get back into it before he goes broke.

if you do want to change the name i would do it over 4 years. keep the same name the first year. combine the name for a couple years, then just the new one.
 
#34 ·
Well if they were all biweekly you'd be making about $33 a cut and I could tolerate that I suppose. But you ruined that thought by stating a good number are weekly which most likely means half or more. So realistically 90 weekly 60 bi weekly add them together thats 120 a week for 4.2 weeks a month now you have an average of $19.84 per cut. Id need more info but I can not see those numbers growing to even an average of $25 which is way to close to the margins for my tastes. Is he even showing a profit? Also the extra work would not find it's self in my calculations for value at all. If you want to count it then divide it by the number of working months and add it to the lawn income and you will have a number of like 12k in income per month and thats about all I would pay for that. And thats only if the lawn numbers are not as bad as it looks from here.
 
#35 ·
You could ask him for a few profit loss statements. typicialy if someone is inquiring to buy a company, esspicialy if they are not already accuanted they will write a letter of intent to the company. the company would respond with a few profit loss statements showing exactly what was spent on what and how much they had in gross sales.

if i were you i would sit down and crunch the numbers. his fustrations may be because he is lowballing on the price. charing 15-20 when he should be charging 25-30. Sure you get clients, but your profit margin is so low that you are making no more than your own wages.

crunch the numbers. see what you are actually making. be sure the prices that you will have to honor if you want to keep the customers are worth it.

keep this in mind also, because i will not crack on someone that offers competitive pricing to bulid a business. if there is enough profit in this to be worth it. you can always add new customers at your own pricing. even if the profit margins are small. 10k a month sure is past much of hte hard part of building from the ground up.

oh... just realized something. make sure you get HIS phone number with the sale. he has built a brand. and that brand is tied to his phone number. so whatever number refferals are calling needs to be your number. this is very important. when sprint tried to steel my number (you own your phoen number, by law carriers cannot refuse to release it even if you owe them money, sprint is natorious for this, fcc form 2000 aprox. will force them to release it).
 
#37 ·
A good way I have found to figure these deals is - equipment is worth what its worth and the accounts are worth about 10% of their yearly value. That is to say if the clients are staying, how long are they contracted and do the contracts transfer to you when he leaves. One time jobs are hard to value, you wont get them back but a good company can estimate how many they might get every year. I would not value these very high. Long term transferable agreements are always more valuable. Having worked for him is a great insight into the workings and value but remember it gives you some disadvantages also. It will be harder to press him for a better price and criticize the things that take away value from the deal. You wont be an employee you will be an owner and with that step up you have to think about your business. You have to get a good deal to make it a good deal if you know what I mean. I was in your exact situation and ended up passing on everything, opening my own shop and surpassing what i would have made very quickly. It was a hard choice but it just wasnt a good deal for me. Hope I helped.
 
#39 ·
Well boys, I know its been a long time since this thread started but I ended up buying the company and ALL my free time disappeared. It has definitely been a fast and furious learning curve but things have worked out ok in the end. I luckily was able to retain 98% of the accounts and then had 20% growth over the course of the season so things held together better than I was expecting. I have learned more than I wanted to about preparing for the worst, the first month it was mine the zero turn croaked on me...ahh the joys of owning your own business. Thanks to everyone for your input, it helped a lot having the opinions of many far more experienced than myself.
 
#46 ·
I posted the rough numbers from the previous year just to get some input on his asking price. Its a done deal now, I bought it, been working it since June. After paying expenses the company is turning a nice profit so cash flow isnt an issue. Even though there is 150 accounts this region had been suffering through a harsh drought since 2011. So some of those accounts werent being mowed but once a month if they werent running irrigation. Anyways, thanks for the input.
 
#47 ·
150 mowing accounts plus fert? So, you need 3-4 guys to take care of this or what? 125k invoiced out? Something doesn't sound right about that.
i agree....sounds a little low for 150 weekly clients
 
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