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looking at purchasing a lawn maint. business

Discussion in 'Starting a Lawn Care Business' started by hawaii-kai, Apr 2, 2007.

  1. hawaii-kai

    hawaii-kai LawnSite Member
    from chicago
    Posts: 3

    I am looking to purchase an existing lawn maintence business. The price is $300,000. The gross proceeds are $280,000. There is about $50,000 worth of equipment. $180,000 is reoccuring accounts, and the rest would be one shot deals such as spraying. I am new to this business, I come form a construction background. What I am trying to determine, is whether this a fair price, and what type of due dilligence should I be doing as I look at this picticular company.
  2. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    I would look at what the net revenue is compared to the gross. Alot of people might say the price is high and to be honest those numbers are about what I do and for $300,000 I would sell tonight. You have peaked my intrest. For $300,000 I could part with my business.
  3. hawaii-kai

    hawaii-kai LawnSite Member
    from chicago
    Posts: 3

    the owner of the company says the net should be around $213,000
  4. Poncho25

    Poncho25 LawnSite Senior Member
    Posts: 369

    I would get an accountant to view their books to make sure what he is stating is true to its value. That's a big chunk of change to drop down into something that might make you drown, being that your new to this business and what not. GL with whatever you choose to do!
  5. supercuts

    supercuts LawnSite Silver Member
    Posts: 2,785

    i think your crazy to consider working a year and a half (net profit) to pay for a business. actually, it would be longer than that, a year and half just to pay the 300K, and the 2nd year you'll be half way into the 87k expenses. my $0.02 is you would have to be crazy. if the business has $50k in equiptment than you can spend that much on your own new equiptent and have any amount of the quarter million left to spend on advertising. im thinking after 10K youve spent more than enough and you should have a decent first year ant not be as nearly in the whole. and if you look, most guys on here take home 15-40ish % of gross profit. hes at 71%, hmmm, not sure about that

    by the way i have a business for sale with nearly 100K in equipment ill sell for $300! its a steal
  6. hawaii-kai

    hawaii-kai LawnSite Member
    from chicago
    Posts: 3

    my brother is a C.P.A. he has looked over the books and they are on the up & up. What I would like to know is what you mean by drowning. Do you feel this to much to take on ? He would train me for two months on my dime. Do you still think I might be taking on too much too soon? I don't want to get in over my head!
  7. bullethead

    bullethead LawnSite Senior Member
    from Texas
    Posts: 273

    Perhaps I don't understand your terminology - but if the gross revenue of the company is $280,000, I do not think there is a chance in hades the net income is $213,000 or 76% net income. The company (including equipment) is worth about $56k(low side)- $90k (high side).
  8. paul vroom

    paul vroom LawnSite Senior Member
    Posts: 260

    I always though a company sold for half of its yearly gross. That sounds high
  9. Poncho25

    Poncho25 LawnSite Senior Member
    Posts: 369

    I don't mean any disrespect but you said you had zero experience in this business. I mean, dropping a dime like that without having ANY experience on how its run, the expenses for a large operation like he has you might be biting off more then you could chew. If you have owned and operated a business in the past then you would have more of a fighting chance, but having zero... to me, its not worth the risk. I have always learned in my past that usally your first gut feeling is the right one to go with, so if your 2nd guessing yourself in this choice, maybe its not the right one for you at this time.
  10. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    how do you Really know there's that many Customers ?

    maybe call some of them and ask has your service been good ?

    Just a thought

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