To buyout an existing business or NOT

Discussion in 'Lawn Mowing' started by meets1, Jun 7, 2004.

  1. meets1

    meets1 LawnSite Gold Member
    Posts: 3,780

    What were looking at - 40 commercial accounts.

    Gross 275K, wages paid 103K, 8 man crew currently

    Largest property - $36K / year - mowing only

    3 -44inch toro walkbehinds
    2 - 52 Z master with Vac bagger
    1 - 220D Ground Master 62"
    2 - 455D wide area mowers
    6 - JD WB 21
    8 echo trimmers
    2 backpack & 3 handheld blowers
    4 pickups, 98 to 77, 3 with dump boxes,
    1 2ton truck with dump
    30 ft gosse neck, w/ side dump
    24 ft dump trailer
    2 - 14ft bumper trailers
    all fittend with trimmer racks, gas can holders, etc.

    He has an offered that can't be refused.

    Price for such a thing?? Ballpark is good.
  2. sheppard

    sheppard LawnSite Senior Member
    Posts: 542

    How you gonna handle the customers? By that I mean who's going to tell them they have been traded?

    Most customers will think about bolting when they hear a "New man has taken over."

    Are the contract/agreements all up to date with signitures? What about a drop clause to cover the customers that bail in the first 30 to 60 days ( wether your fault or no one's fault)

    It'd be nice to pick up that much revenue. Do you own an existing business or are you buying this w/o one of your own? That makes a big difference!

    How old is all the equipment? That's important to know. Will he sign a document stating upon sale ALL equipment will be in normal working order?

    Just some thoughts.


  3. meets1

    meets1 LawnSite Gold Member
    Posts: 3,780

    Oldest mower is a 98. All toro WB are 2yrs old, the z master new this year, the JD WB are 1 year. All trimmers / blowers new this year. He runs them until no more which is why he is running echo's. 90% are on a contract/lease agreement. I currently own/operate my own business. With this is all snow removal accounts, each truck has a blade.
  4. Cutters Lawn Care

    Cutters Lawn Care LawnSite Senior Member
    Posts: 314

    8 man crew and only 103K in payroll????
  5. cajuncutter

    cajuncutter LawnSite Senior Member
    Posts: 626

    I have learned my lesson the hard way. All I can offer in advice is don't do it. Customers can easily say that the contract was with XYZ and not you there for XYZ breached the contract and it is now void. Unless he or she is still billing out and sub contracting the accounts to you it is a gamble. Also if you just have to buy these accounts I would settle for nothing less than making payments at a percentage over an extended period of time. If the person doesn't like the arrangement then just move on. After all if he is getting out of the business then the accounts are fair game to anyone, just use your imagenation. Others can flame away at that remark all they want but there really is no such thing as selling accounts. I will never purchase another lawn account in my life again.
  6. Mikes Lawn Landscape

    Mikes Lawn Landscape LawnSite Senior Member
    from Texas
    Posts: 458

    I would not purchase an existing business for a whole bunch of reasons but lets look at only the money part. on $275,000 in gross he is going to expect 30% or $82,500 for the accounts. Take a look at what you could do with that kind of money for your existing business. Will this purchase double your size can you really manage that much growth all at once.

    With the same $82,500 I would hire a commercial sales manager and outfit 2 full crews. And tell the commercial sales manager to get after it and get you some business.

    You should consider slowly growing not all at once.

    wages paid 103K, 8 man crew currently ?
  7. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    Everything is not always greener....

    Why is the guy getting out?
  8. meets1

    meets1 LawnSite Gold Member
    Posts: 3,780

    Guy is getting out b/c he was offered full time, head grounds person at a local hospital which owns a big day care unit, an assisted living building, an other building where retired people can live with - they own the unit but the hospital has control, a clinic, a surgercail office and one office building that is under construction. Mow, landscape, spray, irrigate, snow will be his bady. Full time, 7- 5 all benefits, and looking for a change.

    As far as growing to much - I don't see that as a problem. I know where I am at now but I am concerned about clients jumping ship or competitors getting in saying what ever.

    cajuncutter - how would you propose making payments over time via % of income??
  9. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    I hope he is "inc." ..... if so keep the name ...... buy out his "stock" ..... produce an introductory letter of whom you are ..... later after a few months have your company buy this one or vice versa

    Customers will NOT jump ship long as the continued quality & past consideration is maintained

    I suspect most employees will stay on ??? What was his exact role in the business ... was he in the field daily ?? either way will the same crew be on the property's ??

    My payroll fore 4 men is around $100K .... I don't see how with 8

    Either way if the price is right this is the BEST way to grow .... the most bang for the buck ... it's how real world business operate every day

    When I sell (which will be in 2-3 years) it gonna be a "turn key" .... I already have my buyer waiting .... I don't understand how anyone can believe that a business can not be sold like any other commodity

    We buy used car’s, homes, equip, etc all the time …. As a buyer we make an educated decision based on over all appearance, expert diagnosis of the internal structure and local market condition

    I’d say your next step is to have your CPA look at the books n find someone whom can give you expert advice on the value …. Good Luck
  10. bayoulawn

    bayoulawn LawnSite Member
    Posts: 211

    You CANNOT guarantee any of his existing clients will stay with you. Some may not like the way you do things and some just may not like you.
    Dont take and 82,500 dollar chance like that.

    Get a list of all his clients and go give them a visit for YOURSELF.
    That way when he tells them he sold his business they already have someone in mind, YOU.

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