Buying accounts

Discussion in 'Pesticide & Herbicide Application' started by grassmasterswilson, Mar 15, 2012.

  1. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,540

    There is the possibility that a competitor in a neighboring town is selling out. I have exchanged emails, but he is reluctant to give detailed info, but has offered to show the numbers at a meeting.

    Our programs are different. I do 6 apps he does anywhere from 5-10 apps depending on the turf. He also offers disease and insect control on shrubs and I don't. He does no mowing and that is something I offer and hopefully could upsale.

    How do you go about buying his clients list. I figured I would base my price on what I would charge on my program not his program(regardless of his numbers). Figured 10% of the gross per customer is the going rate. That 10% would be broken down into 3-5 payments through out the year depending on the client retention.

    Anyone done this and how did you go about it?
     
  2. RigglePLC

    RigglePLC LawnSite Fanatic
    Posts: 12,104

    For spraying customers you will pay around 90 to 100 percent of his yearly gross price. Generally the buyer will not want to give back any money if a customer is not retained--he will view that as your responsibility.
    A payment plan is a good idea. He will not want to sell to you unless you have the equipment and people to do the tree and shrub disease and insect control.
     
  3. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    Unfortunately, 10% is not the going rate, riggle is right, he is going to be looking for 90-100% of a yearly gross, but that does not mean that is what they or worth or what he will get...but I will say 10% will get you laughed right back out the door.

    And you need to base the offer on his numbers, he may be getting more than you, adding value, or less than you and not worth as much....

    I have bought some accounts and had some deals fall thru.

    PM me and I can give you some information.
     
  4. n-green

    n-green LawnSite Senior Member
    Posts: 362

    I have bought accounts and sold accounts. In my area, for weed and feed customers it's 100% of revenue. This is a bad time of year to sell or buy a lawn business IMO. I would take the money and invest in marketing the area where you want to grow.
     
  5. kbrashears

    kbrashears LawnSite Senior Member
    Posts: 761

    100% of yearly gross? Are you people crazy? Then you have to supply the product to treat those accounts? Wow. Never.
    Posted via Mobile Device
     
  6. RigglePLC

    RigglePLC LawnSite Fanatic
    Posts: 12,104

    Yes, you have to supply product and labor to spray the accounts. But then if they are self-renewing--in the following years they are all yours.
    N green is right. This is not a good time to buy or sell accounts, late start. And the customers in question are going to be receiving many brochures and flyers in the mail, from competing companies. It is probably easiest to switch over when the competitor's big sales season has wound down; the customer's mind is elsewhere--say July or August, vacation season.

    Naturally, seller has to supply a nice letter stating that ABC is taking over their accounts and will do an even better job, and their guarantee is just as good, if not better.
     
  7. fl-landscapes

    fl-landscapes LawnSite Silver Member
    Posts: 2,542

    It's called an investment
     
  8. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,540

    Thanks guys. I was thinking that since the season had already started that the buyer would have an advantage. 100% gross seems to be the rate but here we are done with round 1. So maybe u only pay for the remaining apps.

    My father is an attorney and says he would agree on a price say 50k. Pay 10k upfront and the remaining every few months based on the percent customer retention.

    The add is on Craig's list so not sure how legit it is. Based on the number of accounts and asking price he is very high or he is charging or doing a lot more apps than me.
    Posted via Mobile Device
     
  9. RABBITMAN11

    RABBITMAN11 LawnSite Bronze Member
    Posts: 1,373

    50 cent on the dollar is more like it!
    Posted via Mobile Device
     
  10. Ric

    Ric LawnSite Fanatic
    Posts: 11,956

    Hello

    Yes I am screaming.

    WHAT IS YOUR BUSINESS WORTH IF YOU WERE TO SELL IT???????

    Sorry but Business are bought and sold by the Gross sales to Profit Margin ratio. Each industry will have it's own Percentage of gross the accounts or business is worth. For example Restaurants generally sell for 3 times last years gross sales. That right 3 time times a years Gross sales.

    Pest Control Accounts here in Florida will sell for any where from 80 to 125 % of a years gross depending on the prices a customer pays and how tight the route is. I get at least Two Calls or Letters every month asking if I want to sell my business. Last Business broker that call me, I told them I could sell my accounts today for top dollar and not pay any commission. FACT IS I could sell tonight with one phone call and get 100% of the money up front. Of course the Deal would take a few days to work out details Etc. But I have several competitor with the money who have told me they want my accounts.



    BTW In the past when I had a full service company, I found it less expensive and easier to Buy mowing accounts that I could then up sell other services. Plus I got into new Neighborhoods. Think about for a Second. First you are buying established accounts that you only have to start service and invoice. No Big Advertising expense. No Chasing Tire Kickers. No Sales pitches and promises of golden results.


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