Buying fertilization company

Discussion in 'Business Operations' started by DiscoveryLawn, Mar 2, 2004.

  1. DiscoveryLawn

    DiscoveryLawn LawnSite Senior Member
    Posts: 408

    It looks like I am going to purchase a small fertilization company. We have a tentative deal worked out and will probably finallize it at the end of the week. I just want to know what you guys think 133 fertilization customers are worth? I have heard numbers like one to one and a half a year revenue or as low as the price for two applications. What do you guys think? I have already made him an offer to purchase all of his equipment and the customers. I am just curious to seewhat you guys think the customer base is worth.
     
  2. ipm

    ipm LawnSite Senior Member
    Posts: 264

    How many sq. ft. total??

    Demographics, etc.
     
  3. DiscoveryLawn

    DiscoveryLawn LawnSite Senior Member
    Posts: 408

    ipm
    1,216,940 sq. ft. per app.
    less than 30 minutes from my shop in all directions.
    Total 2003 revenues were $34,000.00

    This company does not offer as many ad ons as we do though.
     
  4. lost mountain

    lost mountain LawnSite Member
    Posts: 92

    How many apps per year? Are they all the same number of apps? Turf only or ornamentals? We're used to 7 on residential turf here for a good program. If they were all 7, it would work out to $40 per 10,000 sq. ft. app - average.
     
  5. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,514

    Its only worth what you are willing to pay for it. Are the customers on contract? Are you buying the business or the assets of the business? If you are buying the business you could be purchacing their liabilities . I suggest that you consult an attorney. Itcould save you big bucks in the end
     
  6. DUSTYCEDAR

    DUSTYCEDAR LawnSite Fanatic
    from PA
    Posts: 5,137

    the acc r only worth $ if the sign a contract with u other wise anyone can leave so what ever the equipment is worth plus maby a 3rd of last years rev
     
  7. DiscoveryLawn

    DiscoveryLawn LawnSite Senior Member
    Posts: 408

    Lost Mountian His programs are 5 apps He only did $800.00 in ornamental apps. I will be able to sell much more than that

    Mdirrigation No contracts. I am only paying for the customers that stay with me. I am paying 25% after each of the first 4 rounds. We will adjust the last payment to deduct the customers that did not stay through the transaction. I am only buying the assets of the business. I have already made him an offer and he has accepted. I am just wondering what others think they would be worth.
     
  8. lost mountain

    lost mountain LawnSite Member
    Posts: 92

    That's good. Sounds like you've got this deal structured pretty safely. Good luck too!
     
  9. TSM

    TSM LawnSite Senior Member
    from MA
    Posts: 711

    I suppose price would depend on your market. Around here the large national companies will pay 100% of years gross.

    Myself, because its a small company that you're looking at (133 accounts @$34000) I'd probably offer 75% which is $25500 and set up a payment schedule like the one you mentioned.

    Care to share what you are paying?
     
  10. kootoomootoo

    kootoomootoo LawnSite Platinum Member
    Posts: 4,369

    People change lawn care co's like they change underwear. I am thinking maybe 10000 - 12500.
     

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