selling my business

Discussion in 'Business Operations' started by sparcolawn, Jun 2, 2006.

  1. sparcolawn

    sparcolawn LawnSite Member
    from IN
    Posts: 179

    i'm in the process of selling my business.... i've got a question about contracts though.... can you put a price on contracts, and do they simply pass on to the person that buys it?
  2. VMichael

    VMichael LawnSite Member
    Posts: 4

    I would think that you should let the customers know your selling the business, and once you have a byer, rate them at the price that you get from them now. Once the new owner gots the business, let him meet the customers and they will see if they want to stay with him as their lawn cutter. Hope all goes well with your sell. :cool2:
  3. J Hisch

    J Hisch LawnSite Senior Member
    Posts: 952

    If it is a business not a sole endeavor then the business has the contract not the person, so yes the contract would be worth face value.... of what is remaining to be paid on it. NO need to let customer know you sold the business. Does any other business let you know if they sale? NO the new owner just continues to run it.
  4. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    Thats true, but with a smaller business, ppl are used to seein the owner every now and again, sooner or later they will wonder what happened to Bob, and whose this Jim guy?
  5. AAELI

    AAELI LawnSite Senior Member
    Posts: 362

    The work you have is a result of your relationship to the customer. It would be wise to inform them of the new owner/operator with a visit by both of you. Although you may think of your 'contracts' as property to sell you may find out different.

    All the best in your new endeavor.
  6. ALarsh

    ALarsh LawnSite Silver Member
    from Midwest
    Posts: 2,412

    New machines and you are selling? Weren't you Clean Cut?
  7. GreenUtah

    GreenUtah LawnSite Senior Member
    from SLC, UT
    Posts: 866

    Not even close. Contracts are worth their remaining PROFIT, as there certainly is a cost involved in servicing that contract. That being said, not all contracts are equal in their value either. A customer that has been with the company for ten years and is under contract for another 3 is worth far more than one who just signed this season. Not letting a customer know of changes is a huge mistake, especially for a small biz just running a couple of trucks out. There has to be a transitional period where the customer gets to see the old with the new and become accustomed to the little quirks a new owner will bring, then the old owner can slowly fade out. If your company is large enough that person to person communications with the owner have not been the norm for several years, then you could consider a more faceless transition, but I didn't see anything indicating that would be the case.
  8. SWD

    SWD LawnSite Senior Member
    Posts: 989

    Contract value is dependent upon several factors, most unique to your area.
    Market forces, costs, remaining life of the contract all compile to form the value.
    Regarding your existing customers and contacting them, well that is up to you.
    I personally, do not interact with the majority of my customers. Provided they attempt to reach me, the first stop is through my office and secretary.
    I am aware of the market forces in my area as I have been approached to sell my business by several brokers, all of whom buy and sell businesses as their sole income.
    I would recommend that you do some local research to determine the market forces at play in your area and base your decision accordingly.
    A local Chamber of Commerce, SBA center, even the county extension agent may have useful info for you.
  9. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Business Law 101 tells me that unless the contracts state in clear and concise verbage that they become automatically assumable by mutual agreement for both the new owner AND the customer, they (contracts) become null and void upon the sale of the business...someone correct me if I am wrong. I think not though. :nono:

    You may have the same client, but now you have a new service provider. The equation just changed.
  10. PTP

    PTP LawnSite Bronze Member
    from Tulsa
    Posts: 1,383

    Rod is right. If they made the contract with you, then nobody in their right mind would pay money for it. However, if they made the contract with the company, then as long as the company is holding up their end of the bargain, it doesn't matter who owns it because the company that they made the contract with is still servicing their property.

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