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Offer $32,000 to buy accounts

Discussion in 'Lawn Mowing' started by Golfpro21, Mar 16, 2013.

  1. StanWilhite

    StanWilhite LawnSite Silver Member
    Posts: 2,089

    You're probably aware of what I'm going to tell you, but just in case you're not.........

    Is there a contract between him and his customers? Will he sign a "no competition" contract? I personally wouldn't even consider buying him out without one.

    If you don't have a "no compete" clause in your paperwork, all he has to do (after selling to you) is to turn around and open another lawn care co. under another name and get his old customers back.

    Also, will he talk to his customers and recommend that they stay w/you?
    It'd be easy for you to lose money if you're not careful, and I'm with the rest of the guys, can't imagine why you'd offer more than his asking price.

    I'm thinking that, after hearing your offer, he's either raised his price and then sold it. Or, he's thinking he's way to cheap, and is re-evaluating his price to see just how high he can go w/it.

    I'm afraid you may have shot yourself in the foot on this deal....but, maybe not.
    Good luck, Stan
  2. pseudosun

    pseudosun LawnSite Bronze Member
    Posts: 1,740

    Amen Stan. I have no experience with buying customers, but you stated my fear perfectly. I buy customers with no clause, then the seller gets his customers back.Yikes.
  3. herler

    herler LawnSite Fanatic
    Posts: 5,144

    I can appreciate that, somebody who doesn't dicker the seller around with insulting offers when they see a good price, not many folks like you around, too many people they see a good price have to try and offer a tenth of what it's worth, makes me mad but unfortunately we still don't win them all.
  4. Golfpro21

    Golfpro21 LawnSite Senior Member
    Posts: 563

    thanks for the input

    As of today, I have not heard back from him

    Yes I stated that he would have to sign a non compete agreement

    All his accounts are contract

    The way the deal was structured, he would not get any money from me until the client has paid me, so I have nothing to really lose

    I didn't really offer him more than he was asking, he told me he needed $30,000-$35,000 to sell, so instead of offering the low end, I went higher in the hopes he would say yes right away and we could seal this deal, as I have marketing set to launch in the coming weeks and didnt want to be dicking around with this too long.
  5. Jimslawncareservice

    Jimslawncareservice LawnSite Platinum Member
    from mn
    Posts: 4,137

    At this point, there's really nothing you can do. He may have used you as a pawn to get someone else to pay more. Who knows. I tried to buy a guy out this year. Didn't go over well. It's tough to buy smaller companies IMO. They think they have a hold mine, and want 3 years income for the Dang thing too.
    Posted via Mobile Device
  6. meets1

    meets1 LawnSite Gold Member
    Posts: 3,775

    Call him. Your a business man. Tell him hey, I gave you x days to think about so therefore where are we at? Worse case he sold, keeping or he got exciting being a fireman and forgot about your offer. Your offer, I think is reasonable.
  7. l3en007

    l3en007 LawnSite Member
    Posts: 96

    GolfPro good luck. Is that the going going rate now a days? 25% of yearly gross?

    Other than just "contracting" customers in and signing a no compete, is there any more to the system of selling/buying accounts? I've always wondered this. I feel like there has to be a "perfect" way to sell/buy customers so at the end, all the customers stay with the new company who is buying the customers.

    Does a nice letter explaining what's going on work?

    Does not saying anything to the customer work and just contract them in with your business and then pass then to the buyer? (Basically the buyer keeps the sellers business name) if the buyer keeps the sellers business name I would think the customer doesn't have to be notified.

    I always wonder how the customer will react to this transition, maybe I over analyze it and the average customer wouldn't even care. Of course the buyer would need to offer the same if not better service.

    The system of the seller not being paid until the buyer gets paid from the accounts sounds fishy to me. The seller is essentially offering the buyer (who most of the time has no idea who it is) credit right off the bat. I think I'd want it so I was paid in full before I signed over my accounts. Any info from people who have sold accounts and have had success with it would be appreciated!
  8. Golfpro21

    Golfpro21 LawnSite Senior Member
    Posts: 563

    I have bought out 4 different companies in the past, and it has always been 20% of what the client pays. I have never given the money upfront, because there is a good risk the client does not renew with you.

    Yes we always send a letter introducing ourselves, outlining how we operate, how we bill, etc. We also have the selling company contact each client and explain, this way the client is not surprised by anything, if the wantt o move froward the are sent our contracts, once paid we pay the seller.

    The cons of this set up is that you can be stuck with a few clients/properties you do not particularily like or enjoy, but if you start dropping too many clients, the seller won't get his/her money and will simply find another buyer

    The pros to this is it is a fast way of building a client base, and you get them before your competition do.
  9. Golfpro21

    Golfpro21 LawnSite Senior Member
    Posts: 563

    This seller decided to keep his accounts, he has just been hired by the city fire dept and has to embark on a 3 month training program. He admitted he will not be able to service these accounts at all for 3 months, but has decided to hire a buddy to look after them

    I figure instead of paying him the 23% we will simply pick up a chunk of them when they are unhappy with the crap service they will now be getting.
  10. dnc19694339

    dnc19694339 LawnSite Member
    Posts: 208

    I have bought out 3 guys in last 12 yrs. Always paid up front and always had no-compete signed. Every time the seller would send a nice letter stating he is selling to me and I would have my own letter in the same envelope introducing myself. Had good luck keeping most of the customers.

    For the first year I got all of them, some dropped off in the next couple but thats normal anyway.

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