Done the searches need opinions and advise.... on buying this business....

Discussion in 'Lawn Mowing' started by greenngrow, Jan 3, 2003.

  1. greenngrow

    greenngrow LawnSite Senior Member
    Posts: 403

    Well as luck would have it I am faced with a opportunity that I didn't want to face at this point in my lawncare carreer.

    I get a call yesterday that a LCO in my area is up for sale.
    I went and looked at the equipment today and spoke with the wife about the gross sales. (Husband out of town She is hndling the sale)

    She didn't have all the sales data together but will have it buy Sunday evening. They estimated that gross sales of 140,000 last year with 70/30 split on commerial & residental. They have been in business for 5 years. They cover a 50 mile radius of thier home county. They had 2 fulltime imployees and several part timers.
    The commerial accounts weren't on monthly pay. One thing i would like to change.

    He wants $55,000.00 for accounts and equipment.
    List of equipment as follows:
    16' trailer with trimmer racks and side gate. $1000.00
    2001 exmark 60" 924 hours EPS $3800.00
    1998 exmark 60" 957 hours $3800.00
    Echo SRM-2400 trimmers (3) 2002 and (1) 2001 $800.00
    Echo HC1500 Hedge trimmer 1999 $200.00
    Echo BP603 Back pack blowers (2) $500
    MTD Tiller 1995 $400.00
    2002 Yazoo Kees 48" WB Hydro with sulki $3500
    21" self prop mower $200.00
    Lesco Edger $150.00
    WB Edger $300.00
    Push fert spreader (2) 50.00
    Pull behind spr (1) 75.00
    Stihl HT75 pole saw $450.00
    Stihl 029 chainsaw $250.00
    StihlFS80 string trimmer (1) 75.00
    Stihl FS 85 metal blades (2) 250.00
    Tanaka 2510 trimmer (1) 150.00
    55 gallon sprayer 2002 450.00
    Various other hand tools and misc. $$$$$
    1997 2500HD ext cab 4x4 long bed body in poor condition and 200,000 miles on this 6.5 liter diesel. 7000.00 for the truck.

    Total for all equipment is $24,050.00
    He wants to sell everthing for $55,000.00 equipment and accounts.

    Like I mentioned earlier in the thread. I am meeting again on sunday to look over the books. To get a better idea of what is mowing and what is not.

    Would like to get some feed back and questions to ask when I meet.

    Waiting on pins and needles....

    (If this goes through it really blows my New Years Resolutions all the heck......) I told myself that I wasn't going to spend a lot of mony in 2003.
     
  2. LAWNS AND MOWER

    LAWNS AND MOWER LawnSite Bronze Member
    Posts: 1,129

    Did you come up with figures for equip. or is this what his $$$ are? Seem a little high.
     
  3. turfman59

    turfman59 LawnSite Senior Member
    Posts: 801

    If you are buying a business always ask for a min, of 3 years of quarterly reports or 3 year end statements. it seems to me that the two mowers he is using dont have enough hours on them to generate that kind of volume unless he has changed a couple of them out. Ask a lot of questions, some that you may know the answers to after you read the year end statements, what is his current client turn over percentage.
     
  4. crazygator

    crazygator LawnSite Bronze Member
    Posts: 1,048

    Why is he selling out? What guarantee do you have the accounts will stay with you, even if they are on contracts? Will he sign a no compete clause?

    Just things to think about.
     
  5. Randy Scott

    Randy Scott LawnSite Bronze Member
    Posts: 1,915

    Two full-time employees and several part-timers only generating $140,000 gross? Not too good as far as I'm concerned. Probably why he's selling. He can't make a go of it.

    I know it's just my opinion, but when you have a business you build clientel from your sales approach and the way you service your customers. Your personal interaction with them. You kinda click with certain people and that's part of how you establish this relationship. Taking over someone elses customers never had this ingredient and it just seems too open for the loss of these people. Not that you can't earn their business, but your odds are a little less I think.

    Plus, no contracts with some customers. A 50 mile radius? That's far.

    I think I would go with your plan for the year and pass on this deal. Like you stated in the first sentence " an opportunity that I didn't want to face at this point in my lawncare career". I think it's easier to build to this situation than to buy into it.
     
  6. bob

    bob LawnSite Platinum Member
    from DE
    Posts: 4,254

    If you don't need the equipment don't but it. It seem to be priced too high. A 1998 and 2001 Exmark the same hours and same price? Also do you really want to drive 50 miles? Thats about a hour ride, one way! I have one account thats 22 miles away and it takes 25 minutes to get there. It 's part of a package for a builder, otherwise I'd dump it. Some of the LCO's that I know, gross over 100k a year with one helper. If you truely want this business, I'd offer him a much lower bid.
     
  7. Unless he will take $25k walk a way.
     
  8. So where in his post did you read "no contracts?"

    50 mile radius is not a big deal if you plan it right. Work out that way, work back.
     
  9. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

     
  10. greenngrow

    greenngrow LawnSite Senior Member
    Posts: 403

    Thanks for the replies,

    To answer some of the questions....

    Price on eqiupment is his, I estimated everything at $15,800.00 not including truck. I don't need it. We weren't off much
    I can sell most of the trimmers. (All of his power equipment is at a local dealer being serviced, and repaired)

    The volume and only two mowers with those hours thats what I thought. He must have more in other things mowing...

    He is getting out for health reason and is starting up a Resturant franchies with his brother in GA.

    Yes he will sign a no compete contract...

    In my area 50 miles is nothing because of the rural area. But the area is growing by 10% to 20% every year. I got some LCO driving this for 10 years or better now.

    When I meet Sunday to go over the books. I plan on asking the to see quarterly or tax returns. Only if the numbers look promising

    I have already mentioned my concrean of customer retention. I want to base to customer base on that and pay on a quarterly payment plan. This would keep he from having to borrow any money to do the deal if we can agree on a price.

    A little more background about me. When I said that I didn't want this to happen right now. I am on a plan to go full time but it was in the pkan to go fulltime in March 2004. Not this year.
    My business is setting at just under his for the past two years and I don't hardly mow. Mainly in Fert and chem apps and lawn installs. Mowing would round out the business and I could other this to some of his clients. I just wanted to take this year and pay things down before next season....

    Lets say Best case and all clients stay with me and you add my figures to what he is got. All things stay the same. I am looking just under 250,000.00 gross reciept.

    Thanks again for the replies.
     

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