I know this question has been asked before but...

Discussion in 'Lawn Mowing' started by nobagger, Jan 26, 2006.

  1. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    I think every situation is different. The situation is I have an opportunity to buy out a friend's lawn care business. I read in here a couple of days ago that one guy would not pay for "blue space" and I think thats a good way of looking at it. He pretty much wants to sell his equipment off and give me the customer list, Or so he says. His equipment consists of a 3yr old Toro 48"w/b (very good shape) with roughly 1600 hrs on it. Two new Snapper 21" push mowers (new last year) Sthil trimmers and Sthil bp blower and hand held blower (all 3yrs old) a 6.5x12 open trailer in decent shape. I was thinking of offering him around 3k what do you guys think.:confused: He has around 25 residential accounts and he says it brings in $1700.00-$2000.00per month. We are going to sit down next week and go over a few things. I was hoping he would at least wright a letter to all of his customers and let them know whats going on and maybe I could then meet with them to see if they will be willing to take us on. I really need some good and honest info, this could be a life changing commitment.
     
  2. david scott

    david scott LawnSite Member
    Posts: 21

    nobagger,faced similar sit. several years ago here's what happened.....looking to expand and responded to ad,guy had 10 weekly accounts and wanted to sell them plus a ztr, wanted 5000, yards were not 12 mnth deals but insisted they where good reliable cust. met them and went through with deal cuase i figuered worst case scenario if they all dropped icould just sell the mower and get my money back. well 2 months later thats what happened,seems they were more tied to that guy doing their work than they were to new guy coming in. lost all but 2 to neighbor hood kids, 2that i kept are now full ser. bringing in 4200/yr. sold the equip. and really was out nothing but my time but i dont think i'd do another deal. somethin' to think aboutIMO
     
  3. greengiant9963

    greengiant9963 LawnSite Senior Member
    Posts: 761

    I personally would try to get at least a one year contract with his customers. Some customers are very loyal and do not like change. They might just switch to another service. At least with a year contract they are locked in for the season and they get a chance to see your work and dependability.
     
  4. burns60

    burns60 LawnSite Senior Member
    Posts: 291

    Well, the price looks good if you can keep at least 75% of his customers. If you lose them like D Scott said he did, well, it is not such a good deal. 'Cause if you lose them I'm sure you know the equipment is not worth that much.

    So, good luck keeping the customers.
     
  5. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I'll say this much... When I started, I took over 18 (or maybe it was 20) accounts from what was then my best friend. What I mean is, we were very alike in ways and I believe if anything, this helped in the retention department. Yes, we went to each customers house (both of us, in the car and in the truck) and he helped explain things long before I even went out to service these yards: I feel this is very important! If the fact he was my best friend made a difference, then this other bit certainly did also.

    But it's just the way it is, people get used to the routine of same-ole / same-ole and I lost 2 right off the bat with a few more later during the year, the other half left in the next 2 years and today I feel fortunate I still have about 6 of those original 18 (or 20).

    Did I pay for that? No, but I did pay for some used equipment and in that sense I feel it was a fair deal since I paid what I felt was a bit of a steep price. So, perhaps you pay the guy 4 grand for the equipment, like so:
    2003 Toro model 30165 = $1,500
    Two 21" pos? = $200
    Handheld 2-cyclers = $400-500 (trimmerS + handheld blower - how many, what kind?)
    Bp blower = 250 - 300 (is it a 4-cycler?)
    6x12 trailer = $900

    well what do we have...
    Oh ooops, I come up with 3 grand also lol thou I'm onto 3.3 -3.5k or thereabouts
    Ok then, I guess you're about right, it won't hurt to think 3k
     
  6. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155

    10% of the annual revenue of the accounts is a good number when buying non-contractual accounts. Double if they are under contract. Offer 5-7% if you don't think they'll stay. Equipment depreciates at about 40% the first year and 20-25% there after. Trailers hold their value well. All these values are assuming the equipment is in decent condition with life left.

    Equipment alone is probably worth close to 3k, so if you can get it for that it's probably a good deal. But you have to remember, it's like a sale. Just because something's 50% off doesn't mean it's money well spend. Remember, for 3k you can get a really nice yellow page ad for a year and probably get more customers than he's offering from it, and if you don't need the equipment it may not be a smart purchase.
     
  7. Roger

    Roger LawnSite Fanatic
    Posts: 5,927

    Are you suggesting the present owner get one-year contracts signed BEFORE the sale, and then have the new owner do the work? If I was a customer, I would be very unhappy to have a switch of contractors without any control.
     
  8. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    Thanks for the replies guys. I am actually going into this deal with a partner, I know some of you guys do not like a partner but this guy has many many benifets. 1)He's a manager at a car dealership so he's great with people, 2)He obviuosly is a good salesman,3)His wife owns a realestate company and she works for an even bigger one.(I don't know how that works but oh well), 4)He has the financial backing to buy pretty much anything,5)His son in lawn is a huge developer in our area,6)He would be the type to try and sell a company that he has a vested intrest in. I actually am reading a great book about partenerships and how they work. I will post the name Monday night, if interested. I don't have it yet and I'm getting it from this guy Monday.
     

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