Help on buying out lawn business

Discussion in 'Lawn Mowing' started by Jason15, Jun 13, 2006.

  1. Jason15

    Jason15 LawnSite Member
    Posts: 4

    I am looking at buying out a local lawn service. It includes about 35 accounts, some residential and commercial. Also includes a 10' single axle trailer, 32" gravelly, 52" encore, weed eaters, and blower. He lost his crew and is steadily dropping accounts. I talked to him about contacting the clients before i purchase to verify that they will stay if he sells out. He said no, that i could not call until i bought it. He wants 20K for it and i think it is to high. Especially if i can not verify the accounts. I almost forgot, he said it makes 4K a month. I am already in the business and looking to expand but do not want to get ripped off. Any advice on buying the business?
     
  2. dcondon

    dcondon LawnSite Silver Member
    Posts: 2,246

    No way would I do it. Even if they told him that they would stay with you dose not mean a thing. Stay clear of that deal!!!!! JMO
     
  3. deereman

    deereman LawnSite Senior Member
    from USA
    Posts: 518

    Boy I smell a really BIG FISH! Run and get the H#@! out of there!
     
  4. TMT

    TMT LawnSite Member
    Posts: 14

    The business is not sellable. He can not ask for money for accounts he will not be servicing. He can only sell you the equipment. Do not give him any cash for his accounts. It is possible you will be able to retain the accounts but you have to get each of them on contract for your price, not his. He also may have agreeded to additional services that you do not want to provide. Just my 2 cents
     
  5. SOUTHERNGREENSCAPES

    SOUTHERNGREENSCAPES LawnSite Senior Member
    Posts: 763

    If he acts like he is hiding something he probally is. Anyway, after you figure the depreciated cost of the equipment you are getting ($6k-$10k) what you are really paying for is $10k+ for some customers. I don't know about you, but for that much money, i could run one hell of an advertising campain and come out with twice that many customers. just my thoughts though.
     
  6. Audrey

    Audrey LawnSite Senior Member
    from Pa.
    Posts: 570

    Does he have a profit and loss statement? He won't show you exact customers per se, and that's okay. However, I would want to see the contracts that you would possibly have to honor. (you did not sign them)
    I would want to see the income verification of the 4K per month, or thereabouts.

    For 20K, as stated earlier, I would think you could better spend that money elsewhere and come out farther ahead. Used equipment, used smaller trailer, clientel who can jump ship with the drop of a hat....

    Is there a non compete in there anywhere? CYA...

    Personally, I would balk at this deal. That's a whole lot of cash on speculation and tired equipment.

    A
     
  7. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155

    The business is depressed, no employees and soon to fail. It would be like buying a house that is falling apart. Only but good accounts from a business in good standing or an entire business, unless you get them for next to nothing.

    Not sure how 35 customers net(make) 4k a month, gross is more like it. You can pick up 35 customers with a 2k yellow page ad.
     
  8. TheKingNJ

    TheKingNJ LawnSite Senior Member
    Posts: 781

    i've bought 20 accounts off 3 diffent lco's. never a problem.
     
  9. thill

    thill LawnSite Member
    Posts: 245

    Jason 15

    We recently purchased a small competitor as described below:

    We agreed on a used equipment price and paid for that on the day of transfer.

    We looked at all of his invoices for the last year and deemed them reasonable.

    We then agreed to pay the 1st two months revenue from his accounts after the fact. This means at the end of the 1st month, we paid 50% of the revenue. We did the same for the 2nd month. The final two 50% payments were paid in months 3 and 4.

    We sent out joint letters to all of his customers telling them what was going on. We serviced them at his prices for those first two months and converted them to our contracts. In many cases, we were able to up sale on services.

    We did loose 2 out of 24 during the first two months.

    The seller seemed straight with us and more than willing to go to each site with us if we wished. We chose not to do this.

    It does appear that your seller wants more than it is worth and may be trying to hide something

    I hope this helps.
     
  10. PaulJ

    PaulJ LawnSite Bronze Member
    Posts: 1,776

    ONly pay for the ones that sign with you. your agreement/contract at your prices. and only pay last installment after a set amount of time like 3 months for the ones that are still with you. base it on a % of revenue from those accounts. He introduces you to them in person or at least a letter and helps with that transition or he doesn't get paid for those.
    only buy the equipment if you need or want it. otherwise go buy what you want to use or offer him a really cheap price for everything and make it up by selling the equipment you don't want and treat the customer list as new customer prospects and start upselling right away.
     

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