Buying this comapny

Discussion in 'Starting a Lawn Care Business' started by jequigle, Feb 16, 2013.

  1. jequigle

    jequigle LawnSite Member
    Posts: 236

    I currently am a smaller company with 45 accounts and I am looking to grow. I came across this craigslist listing and want to see what you all think.. I personally think that his asking price is a little high.

    "In Business for over 17 years mostly maintenance and some landscaping. One landscape commercial truck two regular p/u, all John Deere mowers four commercial Ztrak and one regular mower {steering wheel type} 2 push mowers 50 gal. sprayer plus 2 backpack sprayers (sthil) all sthil trimmers,blowers,ect. trailer,.LOTS of other equipment too much to list.Gross Income of about $195K per year with Net of $90K-100K and this is just the average( I have Grossed $325K per year with Net 165K) just cut back and keep the better accounts but plenty of room to grow. ASKING $350,000 serious inquiries ONLY respond to above email only with heading "lawn service" or it will not be open due to scammers, may finance with 220K down again serious inquiries only and with a return phone # only"
     
  2. flyingdutch16

    flyingdutch16 LawnSite Senior Member
    Posts: 467

    It seems kinda high to me...

    Does not really make sense if the highest he has ever grossed is 325k yet he is asking 350k. You will either really have to work you butt off or take a loss for a couple of years. Also it doesent say how many customers he has etc. I would obtain that from him and ask for some proof of his sales ,etc.
     
  3. CowboysLawnCareDelaware

    CowboysLawnCareDelaware LawnSite Senior Member
    from DE
    Posts: 555

    For small to medium company buyouts I have a basic formula, but with large companies everything changes.

    First, Im assuming you somehow have $200,000 to spend. I don't know the exact model's of his equipment or the year and condition of his trucks. But I am sure that he has well over $100,000 in equipment.

    With more details about his equipment we can all give you a better feeling on what we think so get some more details first. I feel his company is worth a minimum of $150,000 , but it is more likely worth $250,000 with his equipment. If you really want to buy, you shouldn't bother if you have less than $200,000 to spend. Make sure you factor in all of the labor costs that you will need should you buy the company, because two guys aren't going to mow all of his accounts in 5 days.

    -Michael
     
  4. CowboysLawnCareDelaware

    CowboysLawnCareDelaware LawnSite Senior Member
    from DE
    Posts: 555

    I forgot to make my main point, after the first season you can sit back in your seat more and let the worker's do more work. While you make $100,000 in profit every season.

    Your buying this company so that your future is secured and your making a "guaranteed" six figure profit every year.

    -Michael
     
  5. MarvelLawnCare

    MarvelLawnCare LawnSite Member
    Posts: 10

    There's no such thing as a "guaranteed" profit every year. I myself am new to the landscaping industry but I have many friends and family members who own landscaping companies, many of who's companies do close to seven figures in sales. Many of them bought companies out before and found out that those loyal customers aren't loyal to the business, they're loyal to the former owner; so once he goes so will many of them. At that point you will be stuck with a giant investment with much less income then you first anticipated.

    I would recommend investing investing 10-15K in marketing per year over the next three years and then investing in equipment as your business grows. If you do that you will have spent less then 100K for the same size, if not bigger business; at that point you will have your desired income, and loyal customer base.

    Good luck, and God bless.
     
  6. CowboysLawnCareDelaware

    CowboysLawnCareDelaware LawnSite Senior Member
    from DE
    Posts: 555

    That's what contracts with no-complete clauses are for. Your not going to keep every customer after the first season but you grow on your own.

    -Michael
     
  7. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,225

    I would question your value on the company and the sitting back after yr 1 and pocketing $100k.

    $195k in sales is 3 guys working shouldn't be much more unless something is missing. The $100k net is most likely before paying himself so deduct $30k for a good crew lead. Next I don't know if that gross is mowing, landscaping, irrigation, etc. That can affect repeat biz and worth. Of course the equipment value is key but it would be hard to sell at his current price point.
    Posted via Mobile Device
     
  8. weeze

    weeze LawnSite Fanatic
    Posts: 8,590

    this is nuts. i used to work for a guy we had 2 walkers. one diesel one regular. 4 husqvarna trimmers, 2 stihl blowers and about 100 accounts. we cut 10 a day with a 3 man crew. these weren't cookie cutter lawns. he would've sold us the business for $15,000 about 15 years ago. should have bought it but i was in college and in a rock band and being in lawncare wasn't what i thought i was gonna be doing in life. lol
     
  9. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    Rule for buying a business is that it should pay back the purchase price in 2 years. 3 years for an exceptional business.

    The point is one does not want to work long term to pay off the acquisition debt. The whole purpose to own a business is to amass the wealth to retire on. Can not fund a retirement plan paying off huge long term debt.

    Next never buy a business unless he has the written proof that his business made the money he claimed for 10 years.

    Many a seller claimed his business made $250,000 a year but he only showed $50,000 for tax purposes.

    Buyer takes the busines over, only too see the business made $50,000 his first year.

    Lesson to the story, if you want to hide money when owning the business you can not claim real profits when you want to sell.

    The business owner has to decide to make the money under the table while owning it or report everything so he can get full value when selling the business. Can't have it both ways.

    If a seller can not show IRS and sales tax records to back up what he claims then you have to believe he is lying. I have read about sellers pulling this scam.

    Next non competes are hard to enforce. That makes me leary to buy a LCO business. Always hearing about a guy selling his business then going after his customers on threads here.

    $350,000 to buy this business.

    Why buy it?

    When you can grow your own business for $60,000. With $60,000 you can buy a truck, trailer, large and small mower, hand helds, and a lot of advertising.
     
  10. jequigle

    jequigle LawnSite Member
    Posts: 236

    What I have found out. Only has about 100 accounts. 100 Residential and 4 Commercial

    Landscape Truck 1998 not sure of mileage or brand.
    Pick Up is a 2005 not sure of mileage either or brand.
    Z-Track 3000 hrs 8 years old
    Z-Track 1200 hrs 10 years old
    Z-Track 1800 hrs 3 years old
    Z-Track 480 hrs 1 yrd old
    John Deere steering wheel mower with 250 hrs and 5 yrs old.

    Did not ask for a detailed list of handhelds and all but says they are all stihl.

    Told me all his assets are around $44000 to $52000

    Also told me that when he grossed $325,000 he had 6 employees but not only has 3.. And told me he could show me the past 7 years of his financial records and the big years he grossed $325,000.
     

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