Buying out existing bus?

Discussion in 'Lawn Mowing' started by meets1, Jan 21, 2005.

  1. meets1

    meets1 LawnSite Gold Member
    Posts: 3,781

    Quick overview.
    He is getting out b/c 20 yrs in business, late 40's, needs a change.
    350K last year mowing
    all toro, 4 pickups, 4 trailers, all hand held equipment
    70% commercial - only one with big enough mowers
    30% residential -
    No contracts
    What in your mines is this worth?

    Equip - good to excellent shape.
    3 - 44 wb
    2 - 52 Z Masters
    1 - 220D Groundsmaster
    2 - 455 D wide area mower
    6 JD wb 21"

    98 Chevy 4 door dually
    91 chevy 3/4 dump box
    77 chevy 3/4 dump box
    84 ford ext cab 3/4, 2 wheel
    72 International 2 ton dump truck
  2. procut

    procut LawnSite Bronze Member
    Posts: 1,853

    Thats a tuff one. I would guess all of the equiptment to be worth somewhere around $65,000 give or take, based on your description. You can debate untill your blue in the face how much the account are worth. Not having any contracts decreases their value. For the accounts, I'd offer him what ever they pay in a week times 4, hope this helps.
  3. J Hisch

    J Hisch LawnSite Senior Member
    Posts: 952

    Ask how long he has had the customers he has now, if they have been with him several years that is just as good as contracts. They will probably not leave if quality and price stays near the same. Also, I have bought companies before on some thing this large, I would not buy his customer base on a one shot deal. Buy his assests and re-sale what you dont want or need. Then have a attorney set up some sort of escrow account he can draw off of for a while untill you get him paid off. This way you are only paying for the customers base thay you actually benefit from. Don't buy his debt either.
  4. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    If that was me, 175K would be the minimum I would accept. Period
  5. meets1

    meets1 LawnSite Gold Member
    Posts: 3,781

    All customers have been with the business for a min. of 6 years and longer. That is based on commercial accts. Res. accts - some leaving due to death, relocating or selling home, and then others keep calling, so it seems to even out every year.
  6. meets1

    meets1 LawnSite Gold Member
    Posts: 3,781


    How did you determine $175K amount?
  7. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Not sure, it was the first number that came to my head.

    First of all, he's selling a real "turn key" business with accounts, equipment, and most of all, a 20 year established business...that says alot. And like I said, 175K would get my interest as him (not that I might sell though) even if someone dangled that kind of money in front of my eyes.
  8. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    And even though I would have my attorney draw up a non-competitive clause as part of the sale, my gut feeling is this guy wants out completely and I don't really have to worry about him down the road competing against me.

    Ironically, my business and feelings as a LCO (I'm 50) are extremely similar to his...strange :dizzy:
  9. J&R

    J&R LawnSite Senior Member
    Posts: 835

    rodfather- I belive the blood,sweet of building a lawn service means something also. I would not sell for less than3/4 of gross sells+ equt. If i put my co up for sell 350,000 or 150,000 + 10% of gross for 10 years.
  10. osc

    osc LawnSite Senior Member
    Posts: 502

    Get him to finance and pay as you go for x number of years and then seek bank financing and pay him off. No risk that way.

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