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To stay or go

Discussion in 'Starting a Lawn Care Business' started by birdsfan82, Nov 27, 2011.

  1. birdsfan82

    birdsfan82 LawnSite Member
    Posts: 11

    Ok here is my situation and all coments will be greatly appreciated. That being said I'm in a rough spot right now. I started a company 2 years ago with a co-owner. I know I know its too late i already did it. But i need oppinions on how to fairly split the company. my ultimate goal is to keep the buisness name, all equipment, and customer base. i could list all the equipment but it would be long, but can tell you the over all value is about $6,000. That includes the truck also. All equipment was bought by the company which means with a co-ownership we both paid half no loans all cash that was earned by the company as a combination of both of our work. What i am struggling with now is i believe i should pay half the value of the equipment since ive already paid for half of everything already. Also not sure what the company name and clientel is worth. We have about 40 lawn customers that i am guarenteed to carry over till next year. Can someone please help me to determine what that is worth so i can make a fair offer on the buy out. I dont want to insult my buisness partner but also do not want to offer more than what the company is worth. Thanks
  2. GainesvilleLawnscaping

    GainesvilleLawnscaping LawnSite Member
    Posts: 59

    I went through the same thing in 2005, but not for a business of this type. If he wants to stay in the business as well (as my old partner did), then it's going to get ugly... so hold on for the ride. You have heard that divorce is ugly, a work divorce is worse. If your intention is to keep the business name, all equipment, and all customers... then you're not splitting, you're buying him out. The only way to make this work is to agree on a number that you'll pay him to essentially leave. If your partner is too full of pride, then no matter what you offer, he won't accept... in which case you'll have to split the customer base and equipment 50/50 and find a way to decide who gets the name. It's going to most likely involve lawyers which will cost you both a ton of money, so try to be reasonable and keep them out of it as much as possible.
  3. DuallyVette

    DuallyVette LawnSite Gold Member
    Posts: 3,162

    Equipment value is worth what today's market says it's worth, not what you origionally paid.

    As for the jobs, without a signed contract they have no value above "good will", but you probably have an idea what their worth, and you need to work it out with your partner. Most posts on this site and discussions with my LCO friends are that they wouldn't give more than a months gross for the job. 1/2 a months gross for you since you already own 1/2 of the job.
  4. LindblomRJ

    LindblomRJ LawnSite Silver Member
    Posts: 2,570

    ^ This is good advise ^ Current market value and half of 1 months gross. If you have an accountant handing the books you should be able to look at a balance sheet to determine owners equity. That should have a starting point to ascertain what his stake is worth in the business.

    I am guessing when you partnered up you didn't draft an agreement that stipulates dispersal in case of closing of business or provisions to buy out the other partner to allow for the business to continue. If anyone partners up or forms a LLC or LLP that is one of the things that is a must have. Even if you have investors you would want provisions, that would preferable make it easy for the investor to liquidate their investments.

    When it comes time to make the offer, have an agreement wrote out that indicates his value with any goodwill and add a non-compete clause. If needed have a third party do an appraisal, a bank can help with a suggestion of who is qualified. Talking with your banker for advise on who and what to use is cheaper than retaining council of an attorney. If there are any fees accrued during this time make sure to split them between you two.
  5. LindblomRJ

    LindblomRJ LawnSite Silver Member
    Posts: 2,570

    I have a couple more thoughts on this.

    If it is an equatable offer you can continue with the business name and client base.

    If the partner is not agreeable, then make a split. From equipment, parts, clients. If there is disagreement flip a coin. If it is more contentious retain a mediator. If all that fails lawyer up and it could end up being a judge's decision.

    You are wise to resolve this among yourselves. That is something you might want to remind your partner of too.
  6. DuallyVette

    DuallyVette LawnSite Gold Member
    Posts: 3,162

    Involving a lawyer will cost more than it's worth. I overheard a couple of divorce lawyers discussing the dissolution of a couples property over lunch. The beachhouse went to one lawyer, and the townhouse to the other lawyer....nothing left for the couple..
  7. RGM

    RGM LawnSite Senior Member
    Male, from Baltimore Md
    Posts: 977

    have you talked with your partner at all bout this who's name is the truck in is the business license in both your name how about your trader license
  8. LindblomRJ

    LindblomRJ LawnSite Silver Member
    Posts: 2,570

    The pisscutter about a case like that, is both couple fought to the end, that is when it gets costly. My divorce was straight forward. I kept the house, my retirement my tools and equipment and my pickups. I took more of the debt but I kept everything I wanted. My ex didn't lawyer up.

    That is why I suggested the attorney as very last case given all the options possible.
  9. ralph02813

    ralph02813 LawnSite Bronze Member
    Male, from Charlestown, RI
    Posts: 1,041

    find the fair market value of the equipment and try to decide who really wants what - if possible try to geographically clump the customers then if you can decide who wants who - have a witness and write it down, if it comes to it roll the dice, the winner gets to pick first the louser has the next two picks then the winner picks, then you roll the dice again this way there is kind of a fairness in the roll of the dice rather than just luck.
  10. fireman gus

    fireman gus LawnSite Senior Member
    Posts: 517

    When my son joined me in our lawn maintenance company we drew up a Joint Venture Agreement that spelled out a lot of the questions you have asked. It also included a clause that if a split was to happen and an agreement couldn't be reached we would get a mediator to settle the questions. Any court house can give names of people who are certified mediators.

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