Purchasing existing lawn maintenance businesses?

Discussion in 'Lawn Mowing' started by CALandscapes, Feb 21, 2008.

  1. CALandscapes

    CALandscapes LawnSite Senior Member
    Posts: 946

    There's a guy in my area selling his lawn business, which consists of 96 accounts. Included in the purchase price is his truck, trailer, and equipment.

    I'm waiting for him to return my call so I can get the exact specs.

    I do know that he grosses over $100k/yr.

    He's asking $45k.

    I am the owner of an existing landscaping co, we focus mostly on installations and government sub contract work (Post-Katrina clean-up). We do, though, service about 15 maintenance accounts. I have 5 full time employees and additional part-time employees as needed.

    If I were to purchase this business I would do so with the intentions of my
    employees servicing these accounts.

    Until I get exact specs I won't know what kind of "deal" we're talking about..

    I'm totally inexperienced and in the dark when it comes to purchasing an existing business...

    My questions at this time is:

    1. In reality, out of 96 accounts, how many could I expect to retain?
    2. What kind of questions should I ask specifically about customers (other than monetary figures and locales)
    3. Is it a good investment to buy an existing business in the first place?
    4. Any other input any of you'll might have on purchasing an existing bus.

    After I talk to him, I'll post some numbers and specs. Thanks for any input!
     
  2. Tight Angles

    Tight Angles LawnSite Senior Member
    Posts: 297

    I think he asking price is too high. Unless all of his equipment is a year or so old and in perfect running condition, and take into account he only has 96 accounts. How many mowers does he have and what kind? If he only gross' 100 g's a year, you probably wont make your money back within the first year, considering expenses like gas, paying employees, maintenance, taxes, ect..If he only has one mower, trailer, and 96 accounts, I would offer half his asking price. Just my opinion. Whats the deal with his truck?
     
  3. GreenSouth Landscapes

    GreenSouth Landscapes LawnSite Member
    Posts: 78

    Most importantly, are all of his customers on a contract? because if they are not, then technically his business is only "worth" what he wants for the equipment. Basically what i'm trying to say is that the customers have no loyalty to the company unless they sign agreements. They could all simply say, oh someone bought this guys company, i better start shopping around. When you are buying a business, you are buying the contracts, if there aren't any contracts then on paper the business is in the red badly.

    just my 2 cents, i would never consider buying a company unless there was proof of profits or the equipment was worth the asking price.
     
  4. earthtrends

    earthtrends LawnSite Senior Member
    Posts: 419

    We bought an existing business a while back and out of 40 accounts we retained 30. You need to find out exactly what his equipment is worth and truck trailer etc is worth. Also you need to find exactly what services each customer has done. We made the mistake of not finding this out and had to find out on our own which delays in services coming up. Find out what his intentions are. Is he willing to stay with you for any length of time to learn the customers or is he out all together. Also you need to put a no complet clause in there for a specific amount of time so that there is no way he can take back any of your clients you get from this deal. The guy we bought out started another lawn care business but we put in there a clause keeping him from regaining customers from us. Be sure the equipment is something you really need and will use and not just sit around. Just my 2 cents. Good luck
     
  5. scagmower

    scagmower LawnSite Senior Member
    Posts: 382

    it depends on the equipment were talking about 46,000, if each account is in a contract your probably not in bad shape, but in my opion i would offer him probably half that, you got nothing to lose he can only say no
     
  6. mowerman111

    mowerman111 LawnSite Senior Member
    Posts: 327

    You can't buy customers, so unless his equipment is worth that much you would be just wasting your money. Make him an offer for his equipment then pay him a percentage for the customers that sign a yearly contract with you, and even then you still can't be sure they are going to stay with you. I think it is a fools game to buy a business like this. just my 2 cents.
     
  7. CALandscapes

    CALandscapes LawnSite Senior Member
    Posts: 946

    Thanks for the comments so far guys. From what I know, he has a fairly old truck, small trailer, and I'm not sure on the mowers, etc. From this understanding, I seriously doubt that the equipment is worth anywhere near 45k. I will be sure to post specs when I get them (hopefully tomorrow).

    A couple of you'll voiced one of my bigger concerns: What if his customers decide, since he was bought out, to start shopping around? Then what, I'm stuck with $10-15k worth of equipment and maybe retain 50% of the accounts? That would be a bad deal for sure.

    I will def. ask about contracts. I'm kind of doubting that he has them; seems like a lot of these mom & pop companies that cut residentially around here just do so based on verbal agreements..
     
  8. Total Lawn

    Total Lawn LawnSite Member
    from Florida
    Posts: 12

    1. I was able to keep about 85% of the accounts when I did it. The other 15% were pita or late pays or both.

    2. You wanna know the customers pet peeves. Each customer has something that they want.


    PS - I think you'd be surprised at how many people would give you a chance. Yes, a small percentage will give you the boot within the first month. But if you can get to know them and keep them happy for a few minths, you're in like flynn.
     
  9. ACA L&L

    ACA L&L LawnSite Bronze Member
    Posts: 1,108

    If you were just to buy weekly lawn customers, what would be considered fair price. On a 32 mow season say for example 10 accounts that gross 2000 a month, what would be a fair price for the 10 accounts. Just the accounts nothing else. I would consider $1000 to be fair. make double your investment back in a month keep 8 of the 10 long term.
     
  10. HLM86

    HLM86 LawnSite Member
    Posts: 118

    Wouldn't yall think that even with contracts, all the customers have to do is say that they are not happy with the service and they are out of the contract?
     

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