buying a business out...

Discussion in 'Lawn Mowing' started by Lakeside, Jul 17, 2004.

  1. Lakeside

    Lakeside LawnSite Member
    Posts: 24

    a buddy of mine who is in the lawn care business has 13 customers he wants to sell. i was thinking 150 bucks per customer (average). i was thinking 50 down, 50 at the end of the season, and 50 for each customer that renews with me in the spring. does this sound too cheap, too expensive, wrong, etc.? any help is appreciated! these lawns start 25.00 and go up to 100 per week, so i think the 150 average isnt bad. any suggestions?
     
  2. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155

    Usually on a repeat service type account it's 10-15% of the yearly revenue of the account. So if you have a $50 a week mow, 8 months out of the year the total revenue would be:
    $50 x 8 x 4.33 (ave # of weeks in a month) = $1,732

    $1,732 x 10% = $173
    $1,732 x 15% = $260

    Usually it's a straight line type of figure. e.g. You have factored in people who won't reneue, those that drop your service because of the change, etc. If there was some sort of guarantee that the customers would stay and/or will renew next year the % would be higher than 10-15%.
     
  3. Buddy Markley

    Buddy Markley LawnSite Member
    Posts: 31

    "Normally" 30% of the contract value.

    Time is ticking down for this season, and if you think you can renew them yourself save yourself some money or have him sign them for next year, but that 30% will be greater of course.

    Lastly....get a no compete agreement from him for a least two years.

    We are looking at selling out, I will finish out this year work all the new contracts for next and in some cases a three year contract for a couple of apartments and a chain of banks will boost that value nicely.
     
  4. Lakeside

    Lakeside LawnSite Member
    Posts: 24

    thanks so much for the reply! that is around what we were thinking, hence the 150 average due to a lot of 25 dollar lots
     

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