More help on buying company with 100 accounts for $50,000.00

Discussion in 'Lawn Mowing' started by Emerald, Nov 19, 2000.

  1. Emerald

    Emerald LawnSite Member
    Posts: 29

    Spoke with the guy Sunday and told him I wasn't interested in paying $50,000.00 for just the accounts. He said he was willing to take some $ down, with so much a month. He mentioned $15,000.00 down. But still wants a total of $50,000.00. He has sweetened the deal a bit and added 2 1997 Toro Proline 52 inch walk behind hydros with 16 HP Vanguards B&S. Also 2 Tracvacs to mount on mowers with 5 HP B&S, 2 sets of Jarco dethatching tines and 1 Jarco Aerator, 1 Billygoat walk behind blower QB883H Pro series and 1 Billygoat truck loader QL2000VE. Just wanted other professionals opinions.
     
  2. KirbysLawn

    KirbysLawn Millenium Member
    Posts: 3,486

    My opinion stands from the first post.

    10% of all gross sales for the next year, if it's as promised he will get his $50,000, if not you don't get screwed.

    Ray
     
  3. Nathan

    Nathan LawnSite Member
    Posts: 193

    It sounds like this guy doesn't get the picture. First of all if this was such a great deal as the seller is trying to made it sound, why aren't lawn guys jumping out of the woodwork. Most of important is the fact that you are giving up a lot of money for a lot of risk, where he is getting a lot of money for no risk. I would give him a renegotiated deal on your terms, give him a deadline to think about it and if he doesn't jump forget about it. My guess is that he will eventually see that he has overestimated his businesses value and cave in.
     
  4. bob

    bob LawnSite Platinum Member
    from DE
    Posts: 4,254

    Just walk away. I bet come spring time, he still hasen't sold the business.
     
  5. I agree with the others on this. There has to be a reason that other lawn care companies are not going after what this guy has to offer. Pass it up.

    You can spend your money better doing some good advertising. Besides you could get stuck with some real crabby customers.


    [Edited by Davis TLC on 11-20-2000 at 05:20 AM]
     
  6. tazman

    tazman LawnSite Member
    Posts: 81

    I would say the only assests this guy has is the equipment. If you want some of the equipment, make him a offer on that. The customer base is not a hard asset and with no quarantees, just to much of a financial risk to you. If he won't take sweat equity, he is not willing to risk anything at all. I also do agree with the other posts that 50K is way to much for something you have no control over. Put the 50K in a mutual fund or something and you'll come out way ahead compared to this guys proposal.
     
  7. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    If he insists on cash and you <b><I>really, really, really</b></i> want these accounts offer him the value of the equiptment plus 3 weeks gross revenue. Not a penny more.
     
  8. jeffex

    jeffex LawnSite Bronze Member
    Posts: 1,933

    put the money in an escrow account contingent
    on meeting each customer and confirming thier intent to stay with you as the new owner. Assign
    a value [say $50 for each lawn} and make his withdraw
    from the account contingent on valid customers. You will
    have to sign an agreement of non-disclosure prior to this
    process to prevent you from simply stealing his customer list. You may still loose a few customers in the new season
    but for the most part you wont get burned.
     
  9. Eric ELM

    Eric ELM Husband, Father, Friend, Angel
    Posts: 4,831

    Nobody will be paying this much money for these acounts. After re-reading your original question, I realized you have to plow snow, and do spring and fall cleanups plus mow the lawns of 100. That comes out to less than $20 a visit each week. You might as well go out and pay 100 people $500 each to let them mow their lawn. If you do keep all 100 of these, you would be getting $10 a week from each customer for the next year. If you hire someone to help you, that will be reduced, plus gas, insurance ect.

    Take a little bit of that money and go spend it on advertising and you will get all those customers that will get dropped when he can't find anyone to pay him. Customers are too easy to find. I spent $30 on advertising to get my start.
     
  10. The only value this biz has is some used equipment.

    Where is the rest of the equipment? If this guy was going out of biz you should get all the two cycle equipment also.
    He is just waiting in ghe wings waiting for you to fail and then he will get all his crappy accounts back plus a price increase.

    The first thing I notice that this guy is clueless is that he bought new hydro walkbehinds with 16 hp B & S engines. For just a few hundred dollars more the could have bought 20hp Kohler V twins.

    Looks like a real scrubby operation at $1000 per customer yearly using 52" machines.

    From this this side of the fence all I see is just a bunch of mid size accounts that just "mowing only" jobs.

    Who applies the fertilizer, pesticides, to these accounts?

    Does you know who with a tanker come and apply liquid urea six times a year at the worst time and you have to cut 6" high grass for weeks on end?
     

Share This Page