Buying mowing accounts

Discussion in 'Business Operations' started by grassmasterswilson, May 19, 2013.

  1. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,515

    For those who have purchased accounts. What was your multiplier on yearly gross sales? I tried .30 cents on the dollar for a company last year and didnt get the deal done. Most guys are asking closer to 1x yearly gross.

    What would you buy them for?
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  2. Jaybrown

    Jaybrown LawnSite Bronze Member
    Posts: 1,160

    I wouldn't. Usually they want the person they signed up with not someone else. They might drop you.
     
  3. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,515

    Yeah. I've always been careful in making offers.

    Sellers usually want money upfront and I have tried to structure deals with payment over a period time based on who stayed.

    Can't seem to find a happy medium that suits both parties.
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  4. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,515

    In an effort to protect myself I have always wanted to buy account paying a certain percent over time based on the number of accounts that stayed. If possible having the payment prevents come from revenue generated from the new accounts.

    Has anyone successfully purchased a business for ....

    equipment you wanted + either xx% of gross sales for xx months or 4-6 payments each quarter to reach agreed account price
     
  5. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,536

    Yes, gave xx% for fert acts, xx% for maintenance and wrote the check at the lawyers office. ** would never buy landscape/ lawn maintenance acts again **

    You will almost never find someone to take a payment deal. If they have to wait for their money thats at risk, they would just as well stay in business.
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  6. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,515

    Yeah I'm on the fence about buying a list. I'd probably be more successful at it if I were to pay upfront. I choose to make payments based on retention which turns seller off.

    The last company I tried to buy was a mowing and app company. I offered 30% gross yearly mowing and 100% gross yearly apps. No equipment. I was still half of what his asking price was.

    It's still for sale too. I understand that sellers don't want to give it away but if you decide to sell then I would hope they would be committed to sell.
     
  7. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,536

    Those are close but I would argue even too generous unless we are talking 2-300k or better in revenue at which point, those numbers are on target or a bit low. Understand Pat that you are really only buying EBITDA - those percentages are just a rule of thumb to get you close to what 5-7 times EBITDA usually runs.

    If someone is only selling 100k or less in sales, do them a favor and buy their equipment and tell them it comes with the accounts.
     
  8. rgbintx

    rgbintx LawnSite Member
    Posts: 2

    For purchasing customer lists, I have made it a rule to never pay more than 2.5x the single job charge. If a yard pays $30 x 2.5 = $75. Max value of the customer. I have been able to pick up 16 customers this year from that. Since there is no guarantee that they would stay. Also had the seller sign a non-compete for a year on those customers. This minimizes the risk.
     
  9. crownpointlandscaping

    crownpointlandscaping LawnSite Member
    Posts: 3

    We purchased accounts when we started years back. We settled on 2.5x customer price for every customer who signed a contract with us. We would not buy a list as there is too much risk there on not enough customers signing with you to make it worth it.Good Luck
     
  10. BPS##

    BPS## LawnSite Senior Member
    from WY
    Posts: 828




    Taking your example and the pulling number out of axx route lets do some "lets say".........


    Lets say some one has 134 mowing accounts for sale, and lets say they want 2.5 times which comes out to $10,000.
    Could you, or could you not spend $10,000 in advertising and probably get 134 accounts from that advertising????

    Maybe you only spend $5000 in advertising and get those accounts.

    For me personally I'm rather reluctant to buy accounts from a selling out lawn service.
    Too many variables as to why they are no longer with you.
    Lawn care is highly dependent on personality and like was mentioned the property owner signed on with John to mow his lawn, he doesn't care about the biz name.
    You buy John's route and next thing you know Mrs Smith that signed on with John says where is John?
    Oh, he sold me the biz. Ok she says, good bye. I don't need you now.
    I've seen it happen far too often especially when residentials are concerned.
    Commercials not as much.
     

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