Buying accounts - What would you pay?

Discussion in 'Business Operations' started by CustomCutters, Jun 12, 2008.

  1. CustomCutters

    CustomCutters LawnSite Member
    Posts: 3

    I've searched this site pretty thouroughly to get an idea of what a reasonable price for a customer list is, and have not had a whole lot of success. So I thought I would start a thread on the topic.

    I realize that there are thousands of variables to consider when buying/selling accounts (how profitable are the accounts, do they have contracts, residential/commercial, etc). As a hypothetical scenario, let's just assume that this "list" we will be discussing is satisfactorily profitable (i.e., it is as profitable as your current book of business).

    Does anyone have experience buying or selling accounts, and if so, would you be willing to provide as much detail as possible (price you paid in terms of gross monthly revenue, services you provide for these accounts, residential/commercial, etc.)? If not, what would you be willing to pay for a customer list, or what would you be willing to sell your current accounts for?

    Personally, I am interested in residential maintenance accounts (mainly mowing), since that is primarily what I currently service. But for the purposes of this site, I think it would generally be beneficial to have a thread for all types account-selling/buying.

    Thanks,

    Brent
     
  2. MJS

    MJS LawnSite Bronze Member
    Posts: 1,316

  3. SOMM

    SOMM LawnSite Senior Member
    Posts: 425

    Gr8 Thread, Brent!

    We feel accounts are best saleable on the high-end residential and commercial, i.e. especially when one does multiple maintenance operations per each account: lawn care, tree/shrub trimmings, bed maintenance, mulch and/or seasonal color plantings, applications.

    Carlton Sheets has said: "Contracts are not worth The Paper that they're Not Written On". (Plowsite may also have one example of our contract, all may feel free to use it.)

    We feel the accounts are best saleable when they are backed up by a written contract per each account. Especially-saleable are contracts featuring monthly charges: whether for amount of cuts -or- equivalent effort (in case of prolonged drought or wet weather). These contracts must feature the owner's right-to-assign, i.e. an "assignibility clause", to rightfully sell the business to a new ownership without the client's balking about it. Saleablitlity of these contracted accounts are best when the contract states that the previous owner will remain accessable to consult with the new owner for a specified duration of time (specified in months - consulting can be done simply by phone and e-mail or fax)

    Written contracts should feature a "contract damage forfeiture" amount equivalent to at least 3-4 months monthly maintenance fees plus all court costs of the client's location's circuit court plus litigation fees of either the owner's attorney or the owner's own small claims court actions - so the new owner doesn't get "whip-sawed" by fickle clients who may side with even a former employee or partner of the LCO owner (we hope the LCO owner or partners had the other partners or employees sign a "non-compete agreement"!! ).

    List-fulls of contracted accounts - without equipment - have sold in Metro St. Louis and surrounding counties for tens of thousands of dollars. One LCO-biz we know of that sold recently, accounts only, sold for nearly $100K !!
    With posh, high-end accounts with well-written contracts, one can easily sell them for 10-15% of their face-value per each entire season featured (multiple-year contacts are sold for multiples of the 10-15%).

    Best of Success to those selling all -or even parts- of their LCO-biz's !!
     
  4. MJS

    MJS LawnSite Bronze Member
    Posts: 1,316

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