Buying other biz's accounts

Discussion in 'Starting a Lawn Care Business' started by Earth-N-Wood Landscaping, Apr 18, 2004.

  1. Earth-N-Wood Landscaping

    Earth-N-Wood Landscaping LawnSite Member
    from Utah
    Posts: 7

    I have been in the green industry for last 7 years, working for someone else. I love the work and I have decided to go on my own when I become financially able. I am currently working on to gain a landscape contractor license and I also have a few other certifications on my belt. Not to brag but to prepare myself when I go on my own in the near future.
    An opportunity came up recently when a friend of mine who have been doing maintenance for last 25 years wanting to sell his well-established business in next few years. I talked to him and expressed my interests in buying his business. But the thing is I dont really know how to "appraise" his business so we can come up with a selling value. I can figure out with all of his equipment by using the fair market value but with his accounts....how can you come up a price for that? Have any of you bought accounts before and how you come up with a price? I am sure there are varies of methods of how to come up with account values but any suggestions or experience you want to share will be very helpful.
     
  2. nuchdig

    nuchdig LawnSite Member
    from oh
    Posts: 43

    Hire an accountant AND an attorney. Have these two look over the business' books separately to determine the value. The money spent on the valuation will be well worth it!
     
  3. Earth-N-Wood Landscaping

    Earth-N-Wood Landscaping LawnSite Member
    from Utah
    Posts: 7

    Thanks nuchdig for your input.
    I am expecting to meet an accountant and an attorney for processing the final stage of buying the accounts. I am hoping to hear someone's experience in buying accounts and how much they spent. I heard from one guy that he bought accounts at 3 times of the weekly mowing price for each account. Does this sound reasonable and appropriate to valuate the accounts?
     
  4. nuchdig

    nuchdig LawnSite Member
    from oh
    Posts: 43

    So much goes into buying an existing business. Do these accounts have contracts? Will they sign on with you? Even with a contract the accounts may not be bound to signing with you. I bought a small business years ago that were under contract but they were "non-transferrable" so to speak. In effect I was buying a glorified mailing list with very little equipment. Valuations from two accountants, an attorney, and a marketing phD came in all over the place from $125,000 to $750,000. The reason for the wide range was tied to the ability to sign each account to a contract. There were no guarantees that any of them would sign. The asking price was near the low end of this range. I wasn't comfortable in buying a mailing list so I had the owner introduce me to his best clients ( I was interested in roughly 20 accounts). I also hired the owner on as a consultant for one year. He was very gracious in doing this and it made the transition smooth. A no compete clause is important (parameters at 3 years and a 300 mile radius). You are on the right track with the attorney & accountant. Hope this helps.
     
  5. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

Share This Page