Had an offer to purchase Company

Discussion in 'Business Operations' started by racer56, May 17, 2007.

  1. racer56

    racer56 LawnSite Senior Member
    from Kansas
    Posts: 285

    Without going into a ton of detail I had this guy that I know very well offer to seel out to me. He wants to stay on for 5 years @ 60,000.00 per year. That is the number he profits from the company each year. He does this with the spot help of 2 part time guys. His selling point is him staying on would make keeping the current customers very easy. He wants no payment for the company itself just the job. He wants to get out from under having to do the books and make all the decisions. He just wants to be told what to do and when to do it :) .
    The plus I see is he feels he can do alot more work by not having to bid all the jobs, do the books, and track all the jobs as far as when and where. The company can make more money on the current customers as he just does what they ask him to do only and really doesn't ever sell a thing. The company makes enough to float him and pay all the current operating expenses, comes with all his equipment(no charge), and the company has made roughly the same money for the last 10 years. We are looking for a change of area so trying to decide to start over or buy this guy out. I can give more info if needed but just wondering if the idea of the thing basically taking care of itself and the money I would get from the company would have to come from up selling the current base, New customers(just like starting over) and doing some of the labor myself to save some on labor costs when I'm not out selling. I have been in sales and lawncare and putting them together would be great. As a solo guy now I feel I get behind very fast and start to get customers go elsewhere do to not taking the money fast enough. I have never been able to get anyone to work for me that didn't become my competition the next week or that was worth anything. This would put me in the sales and hand shaking mode right out of the gate.
     
  2. mlhm5

    mlhm5 LawnSite Member
    from NC
    Posts: 12

    That offer is not in your best interests.
     
  3. PatriotLandscape

    PatriotLandscape LawnSite Bronze Member
    from MA
    Posts: 1,209

    there are only to things a business can to they grow or shrink. Maintaining the same level for 10 years doesn't sound like it would be a good situation to get into. Also for 60,000 he better run the damn company because he would be getting paid like upper management and he would not deal with customers.

    Would you pay 300,000 tomorrow for it? That would be your answer.
     
  4. bullethead

    bullethead LawnSite Senior Member
    from Texas
    Posts: 273

    If he has not been able to grow the business over a 10yr time frame - just what do you think he can bring to the table? He has a business that basically has minimal profitability after you factor in some management salary. Sounds like you are going to pay him $300k for a business that is only worth $20-60k. PUNT.
     
  5. mverick

    mverick LawnSite Senior Member
    Posts: 307

    So, for the next five years you only make money if the company grows? And if you loose customers it costs you money?

    And you have to do the books and all paperwork? Uh, nope. Not me.
     
  6. ChadsLawn

    ChadsLawn LawnSite Bronze Member
    Posts: 1,110

    Nope no way...he wants to stay on for 5 yrs? Sure, then you pay him what you would pay anyother crew leader.. $60 grand a year.. Hell Ill come and run the business for you.

    Id tell him, that hes crazy
     
  7. racer56

    racer56 LawnSite Senior Member
    from Kansas
    Posts: 285

    He has stayed the same size as that is all he wanted and about all he could do with the time he wanted to put into it. It is my Dad's company so staying wouldn't be a problem. HE really mainly wants to get his wife away from the office work and this is the only way without hurting her feelings. She is in bad health and that will take some away from his work as well. Kind of a tought deal as I feel he has some good points about having all the overhead already paid for so the profits from stuff I sold and did would be closer to clear money than an up-start operation.
    I would say a good crew leader here would make 35,000 for 9.5 months of work. The thing of paying him more is buying the biz from him and keeping the former owner on to help keep customers. We look like twins if you take the age difference out of the picture and most of his customers who me anyway. I would like to work with my Dad but everytime we start talking about this deal it goes bad.
    How can I set up something fair to him and me? Say a base of 3000.00 per month and pay him ___ % of something that comes in. I just need to come up with a way I get some money off the current base. HELP
     
  8. DBL

    DBL LawnSite Silver Member
    Posts: 2,219

    so he profited 60k off of owning it now he wants to SELL to you (makes money there) then make the same profit he was making before for 5 years where do you make the money hes getting the profit
     
  9. racer56

    racer56 LawnSite Senior Member
    from Kansas
    Posts: 285

    I understand the number he wants paid isn't going to work. I'm looking for some help with coming up with a plan that will work for the 2 of us.
     
  10. Frontier-Lawn

    Frontier-Lawn LawnSite Silver Member
    Posts: 2,949

    whats your current setup/ employee arrangements now.
     

Share This Page