Buying A Business Need Advice Quick

Discussion in 'Business Operations' started by BZS MAN, Mar 29, 2004.

  1. BZS MAN

    BZS MAN LawnSite Member
    Posts: 13

    I found an ad in the paper that reads "Lawncare co. forsale. Contracts in place. Established for 9 years." I called this co. and found out he has "what sounds like an awesome business" I meet with the owner tomorrow. The business has 100 commercial/residetial mowing accounts and 150 spraying accounts. Nets the owner $80k. $1000 in chemical inventory. 4 lazer z's, 4 trailers, blowers, trimmers, rototillers, ryan power rake, plugger, 5 push mowers(toro and snapper), 2 lawn spray booms, blade sharpener, riding sprayer, big 1000-1500gal. spray tanks and mixing tanks, 88 chevy dually diesel, 2 trucks for spray units, 92 ford dually diesel, dump boxes, 78 ford dually, 93 ford dually ext. cab, leased building, and all office supplies and software....$100k asking price is this good or bad? Oh, by the way he has 8 full time employees and 3 part time that run the business for him.

    Thanks for any info. you can provide.
  2. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

  3. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Posts: 1,847

    IMO, thats a great price. make sure his contracts are assignable, have him sign a non compete then take over.
  4. WeatherMan

    WeatherMan LawnSite Senior Member
    Posts: 693

    If he would come down to 90K I would take it quick
  5. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,640

    What are the terms of the lease ? Transfer taxes on the trucks and trailers from motor vehicles. The trucks are older . Insurance cost , are the contracts assignable or are you buying the business as an entity? If so is there any debt and you would be assuming responsibility for previous screw ups and possible lawsuits. Will the employees stay , do they have non compete clauses , they could quit and go after the work. How many hours on the equipment and what shape ? will the owner stay on as a consultant for 6 months? Do you have the capitol to cover payroll until you have cash flow ? How will you finance ? Will the owner hold a note? How long are the contracts for? Just a few questions to ask him before you pay an accountant and lawer to go over the deal
  6. TSM

    TSM LawnSite Senior Member
    from MA
    Posts: 707

    Mdirrigation ask questions that you definately want to know the answers too.

    Why is he selling? How much revenue does this business produce?

    On the surface it sounds like a good I wonder why such a deal??
  7. Here in south Florida a legitimate LCO sells up to 2 1/2 times the owner benefit plus equipment and inventory. Yours sounds like a steal, I mean deal.
  8. allgreen lawn

    allgreen lawn LawnSite Member
    Posts: 12

    if you think you can make it happen then yes it is a good deal. if you think you can or if you think you can't you are right. I say go for it, and good luck.
  9. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    I would get the advice from my CPA n Business Lawyer

    Sound like a "good deal' but some solid thinking HAS to come into order

    His "net's $80K" ....

    Let's say he "net's" or takes home 10% of every "Gross Dollar" ... so on $1 Millon Gross that would be $100 K ... Correct ...

    In this case .... his take home would really be 8% percent of 1 Million ... I don't know what the real numbers are ... is that $80k profit .... while he ALSO enjoyed a weely "salary check" from the company ( did he draw a weekly income n that the company made $80K ... n if so what was his income ...... or did he just make $80K)

    His list of assets has nothing to do with liabilities … equity … good will …. Economic outlook …. Present market growth etc. case ... this is all ....just guess work ..... as a list of assets has nothing to do with liabilitiy

    These are made up Numbers ... but the truth be told is related to the yearly gross .... fixed cost ... indirect ...n overhead ....

    So again ==> I would get the advice from my CPA n Business Lawyer
  10. mtnlawn

    mtnlawn LawnSite Member
    Posts: 20

    who has the pesticide applicators license? If it's not one of your employees you will have to get licensed for everything except fert- that includes Scott 5 step. That does seem like a pretty good price- I looked into buying a similar co for the same price but decided to start my own co- you are also buying any problems the co may have- also you need to make sure you have the capital to cover your employees or they will go (they may anyhow, and take your contracts with them) make sure the guy selling signs a no-compete as well, he may be in some sort of trouble with this company- he can liquidate it and re-open under a diff name. It's worth the $$$ to have a lawyer & accountant look into this as well as a bank (see if you can open a line of credit up against your equity)- if you can't afford to pay the lwyr & acct- you should just walk away.

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