Evaluating company for sale

Discussion in 'Lawn Mowing' started by kaufmaninc, Jan 14, 2003.

  1. kaufmaninc

    kaufmaninc LawnSite Member
    Posts: 168

    I'll be looking at a company this week that wants to sell his LCO. I haven't called for details yet so I thought I'd get some feedback from those who've been around. He wants to sell the account list with or without the equipment. I don't know what the equipment is, but that really doesn't concern me. I'm more intersted in his book of business.

    Help me compile a list of questions that you would ask. I would think with all the experience, the list should be quite long.
     
  2. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Well, since you get a lot of snow there, I'll assume you don't get year-round accounts like we do here. But that would have been one of my questions - "How many of the clients are year-round?"

    I'd want to see a list of the customers and the age of each (e.g. how many years have they been doing business together?)

    I'd definitely want to know how much per landscape and get an idea of how much time spent at each place. And I'd want to randomly (at my selection!!!) choose 4 or 5 accounts and go over them with the seller. This random selection should give you a good idea of whether he's priced the rest of them right or not. And it still maintains the secrecy of the entire list for him.

    I'd want his guarantee that he'd help me make the transition as smooth as possible - giving me very high accolades and reassuring all of his customers that we'd take care of them just as well as he did.

    I'd like to see payment histories from each customer. If he uses Quickbooks, this is simple. But I personally can't stand late-payers. So I'd want to know how many of them there were in advance.

    Other than that, I'd just discuss payment terms. I've always figured I'd pay a seller about one months' earnings for each client he sold me. And I'd offer 50% down for the total payment. And 50% in 2-3 months, when I can see for sure how many actually stayed with me after he left. And then I'd want whoever left me to be discounted from the total. Does that all make sense?

    Finally, I guess I'd like to get a clause that allowed me to be able to refuse 2 or 3 accounts for whatever reason I wanted. If you don't get an entire list of customers until the sale is complete, this is important. Because you may find out later that a few of the clients just aren't profitable. Either they were underbid or they are too far away or whatever. But I'd like to have that safety net if I could.

    You can figure out the equipment thing on your own I am sure.

    Well, that's my 2 cents.
     
  3. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    Excellent reply!!! I had the same problem that past year when, my uncle of all people wanted to sell me his accounts, but get this those accounts another lawn care company gave him, FREE. I found out this by calling the other lawn care company and asking the price that they sold them to him as and they said that they just gave them to him. I think that whenever someone sells you the customers you first must think....

    1. How reliable are these customers?
    2. Will they stay with you?
    3. Were these customers happy with his past services? Because if he suggests you, they might think that you will be just like him
    4. And this is an important one that not a lot of people think about..."Are the customers happy that they keep on getting switched from one LCO to another?"
     

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