Buying an Existing Business

Discussion in 'Starting a Lawn Care Business' started by BrettF, Jul 11, 2009.

  1. BrettF

    BrettF LawnSite Member
    from Indiana
    Posts: 3

    Starting to give real consideration to buying one or two existing lawn care businesses in a given area. I'd greatly appreciate any thoughts on how to properly value an existing lawncare/landscape maint. business, experiences anyone has had buying an existing business, questions that should have been asked, but weren't, how you retained customers, where you found opportunities to create efficiencies, performance metrics, etc.

    At the risk of getting pummelled, I'll tell you that I'm a lawyer in the banking and financial services industry. That I ended up doing that is almost a Forrest Gump story because I grew up in the midwest, in the country down a gravel road and should have been a farmer! :hammerhead: It's time for me to move on to the next phase of life and I'm attracted to the mix of owning my own business and getting back outdoors to make my living.

    Anyway, as I said, I'd greatly appreciate reading about any of your experiences in buying an existing business.
     
  2. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    Youre not going to make $350 an hour cutting grass.

    What are you thinking?
     
  3. wls

    wls LawnSite Member
    Posts: 3

    I'd be real careful and do your homework. Make sure you are not overpaying for the equipment. If you think you are buying the name of the company, make sure it is a name you want to own and has a good reputation. Don't take the word of the seller that all the customers are happy and will stick around. DON'T OVERPAY FOR ACCOUNTS! Think of how much advertising you can do for the price that is being asked for the accounts.

    Not sure of your financial situation but don't plan to make money for awhile.

    I won't go into my whole story but have some experience in what you are thinking about doing and learned some lessons the hard way. There is money to be made in this business but there is A LOT to learn - it is much more than mowing lawns!
     
  4. triadpm

    triadpm LawnSite Member
    from md
    Posts: 79

    Even with a no compete clause I have seen former employees of the sold company take most all of the work. Happens all the time
     
  5. tradeyouraccounts

    tradeyouraccounts Banned
    Posts: 344

    These are some common procedures normally taken during account transactions.

    -Check the Account payment history. Check the history of the accounts to assess if the accounts are paid in a timely manner. Ensure that the person offering the accounts is actually the owner of the accounts.

    -History of accounts. Get a complete history of the accounts. The history should show dates of services performed incase a warranty query arises. It should indicate when the account was billed and when payment was received. It should also show a guide to the prices charged for additional services performed and the age of the accounts.

    -Make sure your comfortable with the account owner before entering into a transaction. Talk to the account holder and meet them to ensure you’re comfortable with them. If you’re new to the industry involved you should ask for a training period some times up to a month. You need to be comfortable with the account holder to smooth the transaction. If you are not it may not be wise to go through with it.

    There is more info at http://www.tradeyouraccounts.com/thingstonote.aspx
     
  6. BrettF

    BrettF LawnSite Member
    from Indiana
    Posts: 3

    Thanks for the great info.
     
  7. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    What I have seen here lately, a ton of companys are going into debt.... BIG TIME,
    then there trying to sell the company....

    and YES the new owner is responsable for this debt....

    KNOW what your doing guys
     
  8. BrettF

    BrettF LawnSite Member
    from Indiana
    Posts: 3

    great advice. In thinking about how to structure a deal I had pretty much decided I would go with an asset acquisition rather than buying the entity. That takes care of the liabilities issue, except that one would need to be sure the equipment is free and clear of liens. But, still, great thought and advice. Thanks.
     
  9. triadpm

    triadpm LawnSite Member
    from md
    Posts: 79

    I was talking to my bank about a towing company for sale yesterday, and the Lady brought that exact point up. She said if you keep it in that company's name you are responsible but if you bring it under an established (your existing name) company no....not sure I will ask my CPA.I told her I couldn't use his name becuase it is lower than dirt around here. Basicaly buying trucks and his accounts, that should be transferable. He is known as a predator towing company and gets harassed by cops. I guess thats why the price looks so good. Anybody bought another company out lately?
     
  10. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    This is NOT ALWAYS the case... I just attended a class " taxes " from the Government last week. and this issue came up. " it was fresh on my mind "
    It simply depends on how the sale is conducted, and the contract.

    Very tircky stuff guys. it would be best to consult an attorney. and make sure he has handled sales of businesses in the past.
     

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