Buying out another company

Discussion in 'Starting a Lawn Care Business' started by sootonurford, Jul 26, 2014.

  1. sootonurford

    sootonurford LawnSite Member
    Posts: 19

    I run a small company in central NJ doing about 40 lawns a week solo at the moment and bring someone in when i have alot of side work. A local guy around my age (mid 20s) is selling his business and has 75 weekly lawn accounts. He is also selling some equipment that is maybe work 8k that i do not need and my stuff is way newer/nicer. He says the lawns alone make 60k a season not including cleanups. All together is claiming it makes 90k a season not including paying his guys, fuel, taxs, ext. My question is what would you guys pay for a company like this? He is asking 75k which i find way to much but if he comes down on the price i am interested. This would put me well over 100 weekly cuts right where i need to be. Any input would be appreciated.
     
  2. xstatikplus

    xstatikplus LawnSite Senior Member
    Posts: 294

    I've seen a few companies for sale and the typical asking price is around my estimated annual gross the company would pull in. Granted solely just my estimate figured by number of contracts, my avg price of what I would charge for houses in that area. I personally never went into actual negotiations to get actual income numbers. Just giving you an idea of if it's a fair price or not. One thing for sure though....if you ever buy an existing company understand some contracts will cancel simply due to owner change and as for the seller of the company. Get a no contest clause in the purchasing contract stating he can not work in your area doing landscaping for x amount of years or you might see him stealing back contracts in his brand new truck and all new equipment that you bought him
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  3. sootonurford

    sootonurford LawnSite Member
    Posts: 19

    I will be getting a no competition clause for sure but my main fear is losing alot of customers right off the bat. Its inevitable to lose a few. You think his price is fair though?
     
  4. whiffyspark

    whiffyspark LawnSite Fanatic
    Posts: 6,100

    No. It's a service business with no contracts. He has no land or equipment worth buying.

    Offer a percentage each month for 3 months - 12 months. No way I would shell out 75k for a tiny company
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  5. RonWin

    RonWin LawnSite Senior Member
    Posts: 665

    I think your almost where you need to be. Advertisements beginning of next year with a good sized budget will get you closer to the 100 accounts than setting yourself back 75k for somebody else's customers who might bail anyway.
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  6. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,758

    1000$ per account is NUTS!

    If you have the cash, Id offer him 20,000 and not a penny more. And that's if you want it real bad.
     
  7. sootonurford

    sootonurford LawnSite Member
    Posts: 19

    1000 per account is nuts i didnt think of it like that. I do some advertising havent really had to much luck. Theres a million landscapers around here i see a new one everyday the competition is unreal.
     
  8. SRT8

    SRT8 LawnSite Bronze Member
    from CA
    Posts: 1,292

    $1,000 per resi is normal around here. I think its insane to spend that kind of money. Save it for marketing and equipment.
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  9. xstatikplus

    xstatikplus LawnSite Senior Member
    Posts: 294

    Like I said asking price is usually 1 yrs gross out of the companies I've seen for sale. Is it worth that? In my opinion and as others have said....not a chance.
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  10. xstatikplus

    xstatikplus LawnSite Senior Member
    Posts: 294

    Offer a percentage each month for 3 months - 12 months. No way I would shell out 75k for a tiny company
    Posted via Mobile Device[/QUOTE]

    This isn't a bad idea but chances are the seller wouldn't even entertain the idea but there is nothing to lose by offering
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