Selling off accounts

Discussion in 'Business Operations' started by AABHRLC, May 11, 2008.

  1. AABHRLC

    AABHRLC LawnSite Member
    Posts: 14

    I have decided to sell "excess accounts" for the first time in my company's history. They are accounts that are residentials not bunched together with other accounts and farther out of the way than I would like to drive now with gas costs. How do I go about coming up with a selling price? Someone told me total up the accounts value for 3 months then ask for half or a third and another person said the same thing except use the totals for the entire year! Does anyone else have any suggestions?
     
  2. Nuckie48

    Nuckie48 LawnSite Member
    from So. Fla
    Posts: 5

    I'm in the exact same position. I'm in the process of selling the entire business, due to relocating. I have figured up to total for the entire year, plus all equipment and trailer. Can someone with knowledge of this process please reply to both of our questions. Thanx in advance
     
  3. SwihartServices

    SwihartServices LawnSite Member
    Posts: 154

    talk to a business broker
     
  4. mgugliotti

    mgugliotti Inactive
    Posts: 58

    When I sold my accounts, and subsequently that portion of my business, I was getting the current value of the equipment (used) and about 1.5 months of the average revenue of the account. so, if an account averaged say $400.00 a month multiply it by 1.5 = $600.00. Selling accounts is a difficult thing, unless you have a contract with the customer, there is nothing to say that the person buying the accounts are going to keep the new guy, so it is risky for him, thus the low selling price. I would suggest setting up a transition plan where the guy that will but the accounts works "under you name" so the customer gets used to him as a part of your business and is more likely to keep him on when the sale is final. It has worked very well for me. It will serve all involved very well and keep it professional so the customer does not end up losing.
    mg
     
  5. NOOB

    NOOB LawnSite Member
    Posts: 188

    Nuckie48 Where abouts are you in So Fla?
     
  6. Nuckie48

    Nuckie48 LawnSite Member
    from So. Fla
    Posts: 5

    Thanx mgugliotti, good advise. Noob....I'm in Cooper City (Broward County), which is in between Ft.Lauderdale and Miami. Interested!!!!
     
  7. mgugliotti

    mgugliotti Inactive
    Posts: 58

    no problem glad it helped. if you need more specifics let me know, i have done this a few times, with great success for all involved.
    mg
    www.solidcontract.com
     
  8. AABHRLC

    AABHRLC LawnSite Member
    Posts: 14

    So 1.5 months of the accounts income total income is the way to go huh? Even for accounts that involve trimming bushes and/or mulch? No offense, it just seems kind of cheap! But then again the buyer is taking a risk because the ones I am selling are non-contract properties and may decided not to go with buyer.
     
  9. Nuckie48

    Nuckie48 LawnSite Member
    from So. Fla
    Posts: 5

    I was thinking the same thing AABHRLC, but it makes alot of since. I think it would be more if we had "signed" contract customers, then they would have to stay with the buyer until the end of the sign contract.
     
  10. mgugliotti

    mgugliotti Inactive
    Posts: 58

    hey guys thanks for the reply... let me just say this: something is worth only (or up to) what some one is willing to pay for it. Look at ebay there are people on there spending 20 bucks for a cotton ball.... yes one ordinary cotton ball, that is really only worth maybe a penny. so value is always in the eyes of the buyer. 1.5 is a good starting point. I think anyone that is going to buy your business is going to want to do "due diligence" which means they are going to want to see your books and what each account has historically done. they may be willing to pay more for accounts that yield a higher revenue stream, an account that uses 100yds of mulch a year, every year for example. But to reduct the risk for the buyer, you need to sit down and write up a transition plan. get the customers used to him, and you field any complaints from your accounts for the first month or so, they have the relationship with you and they i'm sure want to keep that. Once they have gotten used to the new guy you can transition him over and usually keep a 95% retention rate. most importantly the customer is served right. so, start at 1.5 and see what "value added" things you can offer and see where the price goes. Hope this helps.
    mg
    www.solidcontract.com
     

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