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Lawn Company Appraisal?

Discussion in 'Lawn Mowing' started by rmpettit, Jan 1, 2005.

  1. rmpettit

    rmpettit LawnSite Member
    Posts: 6

    I am considering purchasing a lawn care company that is for sale. It brings in $2500 a month. Is there a typical sale price for lawn contracts? Any information would be greatly appreciated.
  2. shaughnessylawn

    shaughnessylawn LawnSite Member
    Posts: 117

    well there is a couple of things to consider, what is the over head of that company a month,minus that from the 2500 are they signed cntracts 4 2005,what kind of equipment come with it and how are they asking for the company hope I could help
  3. rmpettit

    rmpettit LawnSite Member
    Posts: 6

    well I havn't talked to the guy yet. I found out through a friend. The guy has some equipment but I don't know what...he has several contracts but I don't know if they are signed contracts. I want to get my ducks in a row before I talk with him so that I know if its a good deal or not.

    In the past I've heard that the going in rate for contracts is 4 times a cut or 20% or a seasons revenue.
  4. i_plant_art

    i_plant_art LawnSite Senior Member
    Posts: 558

    i wouldnt pay for not more than 10 % of the value of the contract for it .. equipment is a different story thats all different
  5. jeffex

    jeffex LawnSite Bronze Member
    Posts: 1,933

    Unless this is someone you know well I would procede like this; First download a non-compete form and a non-disclosure form from smart agreements .com. Call the seller and inform him you have a non-disclosure form which states you agree that if he takes you around to his customers you won't try and approach them on your own[ you won't steal his customers]. Ask him to show you verification of the income stated by looking at his books or just adding up what each customer pays. Average # of cuts in your area x price he says they pay[ talk to them and ask what they pay if you can]for example, 25 customers averaging $700 per season = $17,500 What you would pay for that POTENTIAL gross income is your decision. How desperate is the seller? My guess would be between $5,000 and $7,000 . If the seller wants all the money up front you have no guarantee the customers will stay with you. You need to get a lawyer to put the money in escrow to let the seller draw from at agreed times once you actualy take over the customers. If you loose some of the original customers after the first month then you can deduct that from the final draw on the escrow. After that your on you own. If I were selling my business and had to agree to this process I would probably want $7,000 to $8,000 for the hassle not to mention the lawyers fee. The non-compete form is for the seller to agree not to start up again in the area you just bought from him. Evaluate the equipment seperatly based on what it is worth used. You can buy your own new stuff!
  6. packerbacker

    packerbacker LawnSite Bronze Member
    Posts: 1,433

    Ill say the same thing i always do about buying customers. Why would you pay for something you can get for free?

    Buy the equipment but DONT pay for customers
  7. hoyboy

    hoyboy LawnSite Senior Member
    from Chicago
    Posts: 346

    Packerbacker -

    I take exception to what you have just said, as should most of the owners on this forum. I hope you are just talking and don't really mean that...

    Some of us have spent considerable time and effer, even our lives putting together the hard earned equity we have in our businesses. To say that you can get customers for "free" is a gross misstatement. All the calls, the estimates, the weeding out of bad customers... What I (and others) have is a profitable list of exceptional customers. We have already sorted through the riff-raff and accumulated a list of customers who pay well, demand much, and are very comfortable with having us on their property.

    That "sorting out" does not come free. If it does, than your (not mine) customers are worth exactly what you paid for them...nothing. But for the majority of us, they did not come free...and we will not sell them for free. Please use your words more wisely.

  8. packerbacker

    packerbacker LawnSite Bronze Member
    Posts: 1,433

    So you telling me that you would rather pay a company to get its customers then taking some time handing out flyers or advertising? Makes sense to me!!!!!!!!!!!!!!!

    Hell ill just go out and spend $10,000 on customers when i can spend 1/20 of that on advertising and get the same results!

    The lack of thought by some people here is completely amazing!
  9. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I would like to know how they come free as well? Besides referrals that is...
  10. packerbacker

    packerbacker LawnSite Bronze Member
    Posts: 1,433

    We all know that they are not 100% free. Of course we pay for advertising.

    When i got into business i bought someones used equipment. He offered to sell me a list of customers for what amounted to about 2 months of profit. It was about 30 houses. I said no thanks and did some advertising and with some word of mouth a couple months later i had 30 houses. In all i spent about 300 bucks on advertising.

    Now correct me if im wrong but $300.00 is less then $8000.00.

    Im sorry for not being more clear. Ill spell it out next time word for word.

    But ill stick to what i say. To pay someone a substanial fee for something you can get by sending out flyers and opening a phone book is S T U P I D

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