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HELP - Should I Buy This Lawn Business For Sale?

Discussion in 'Business Operations' started by nj78998, Dec 11, 2013.

  1. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Posts: 2,717

    I must be missing something if spending more than 1/3 potential gross for a companies client roster is a good deal.
    Posted via Mobile Device
  2. nj78998

    nj78998 LawnSite Member
    Posts: 9

    That is why I posted this on here. Seems people are in both corners on this. As far as I could tell on this forum there are varying ways to package the sale of a lawn business. I want to see where the dust settles. This is interesting. Thank you to all who took the time to contribute! :)
  3. Bryan27

    Bryan27 LawnSite Member
    Posts: 148

    The terms seem reasonable if the numbers work, you would basically be buying him out with sweat equity.
  4. wbw

    wbw LawnSite Fanatic
    Posts: 5,469

    Bottom line is this.... A year from now you will be saying one of two things.

    1. Dang that was one rough year but we lived through it. Now we have all these new customers paid for and will profit from them for years to come.

    2. Dang. I should have bought that route.

    You just have to decide what you want to be saying this time next year.
    Posted via Mobile Device
  5. nj78998

    nj78998 LawnSite Member
    Posts: 9

    Thanks everyone.

    The seller was unwilling to be flexible on the $60K sale price. In other words even if only half the clients returned with a signed contract, the sale price was still $60K.

    If you crunch the numbers that means the clients (who currently would cost me $375 each) could cost double to buy ($750 each).

    As one forum member put it, could I market with a budget of $375 or $750 and get a customer? I know so. Probably a few.

    Plus the seller was unwilling to cap how long the deal would go for. The problem is that if only 20 customers are around after the season, it could take years and years and years to pay back the $60K.

    I came to the conclusion that this deal looks good if everything works out just right but the problem is nothing works out just right. And this could come back to bite me with no flexibility in the sale price based on # of returning clients.

    Call me conservative but I have deemed this deal too risky. I am fairly good at marketing so I will stick to a bigger marketing push in 2014 on my own.
  6. A. W. Landscapers  Inc.

    A. W. Landscapers Inc. LawnSite Bronze Member
    Posts: 1,287

    Seems like the seller is trying to sell his client list and not an actual business…a business runs whether the owner shows up or not.

    If he was selling a business the only thing that really changes is the name of the owner of the business. A true sale of a business should be a smooth transition over to the new owner…even if the sale included merging the newly acquired business into your existing business the transition should be smooth. The seller should do everything on their end to ensure a smooth and complete transition of all clients…especially when the business is dependent on those existing clients…no clients = no business.
  7. PenningsLandscaping

    PenningsLandscaping LawnSite Bronze Member
    Posts: 1,855

    Try some marketing, spending 60k on a client list is nuts, especially when you're already subbing out work. Subbing out lawns after a company acquisition is a really fast way to get fired. Customers view that as a lack of orginization and reliability. No wonder you're so concerned on the retention rate. Keep doing what you're doing.

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