what % of gross paid for co.

Discussion in 'Pesticide & Herbicide Application' started by turf hokie, Oct 17, 2003.

  1. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    First post but I have been reading these forums for a while. Here is what spurred me to log in

    I am looking to go out on my own after years of making other people look good and making THEM great profits.
    What is the dollar value placed on a fert application business these days. Keep in mind metro NY, the higher cost of EVERYTHING and nobody is a DYI anymore

    Here is what I am looking at :
    This company used to be a franchise years ago, similar to lawn dr or scotts. Due to a mutiny many years ago, the franchise fell apart. However, it survived locally and currently has 3 operating co's in the area (very amicably mind you) 2 in the county I wish to get into.

    Here are the details

    --32 year old company
    --currently in 2nd generation ownership
    --VERY recognizable name
    --mimimal equipment
    --operating as a one man show
    --owner is fairly eager to get out but willing to wait for the deal he wants.
    --owner is willing to hang around to ensure a comfortable transition (as part of deal, no additional compensation and willing to allow me to withhold % to ensure he responds to any needs I may have.)
    --running at about a 60- 70% gross profit, without owner salary (he pulls from profit as he needs)

    I am looking for some feedback on what you folks feel is a fair % for me to pay on this type of comany is it 20, 50 100%?

    Any and all input is much appreciated
     
  2. Ric

    Ric LawnSite Fanatic
    Posts: 11,957

    turf hokie

    New York and Florida are more than just miles apart. One of the big boys in my area keeps trying to get me to sell the pest control accounts. No equipment just accounts. Last time he tried, he made an offer with another competitor to buy the rest of my business. Any way their offer is 100% years gross and this is standard here in Florida for pest control accounts. However I have heard of 1.25 of gross buy outs. Lawn service business are general 25% of a years gross.
     
  3. GLAWNLLC

    GLAWNLLC LawnSite Member
    Posts: 11

    tru green chemlawn just bought out my competition for 150% on one years gross. that was just for the customer list.
     
  4. rkk95

    rkk95 LawnSite Member
    from west PA
    Posts: 165

    I have heard of Scotts paying 160%, I have never heard of chemlawn paying anywhere near that much. I know one person that sold to chemlawn and they only payed on the customers that stayed with them for at least two applications.
     
  5. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    Sounds to me like my understanding is right in line. He wants 100% w/ minimal equipment. I have heard as high as 200% but that included warehouse space. Thanks for the input, it settled my questions with unbiased opinions.
    Looks like I will be around here a little more often these days.
    Thanks.
     
  6. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    I guess the next hurdle is structuring the deal. Is it normal for most of the money to be up front? Say 50% at signing of deal, 30% at takeover and 20% held for lost accts and seller involvment ?
    Thanks for the help.
     
  7. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Posts: 1,712

    One seller told me TG and SCotts were 70-90% of gross plus a bit of fine print. Scotts paid more, faster ansds with less hassle.

    Who is the "Lawn King" dealer going out?
     
  8. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    Harold

    That's a pretty astute assessment on the Lawn King. I guess there may be some still operating in your area. How familiar are you with them? I know the owners up here pretty well as I used to run a LESCO store. Don't want to really get into which on as negotiations are still open.
     
  9. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Posts: 1,712

    Been there and done that in 1971 with LK. Quality operation, greedy, hard headed franchisors, but that didn't make them bad people. They were likeable. I went in in the infancy.
     
  10. DUSTYCEDAR

    DUSTYCEDAR LawnSite Fanatic
    from PA
    Posts: 5,134

    how many acc are u trying to get 50,100,150? what % do u have to pay to the franchise when u take over? would u be better off just mass marketing and saveing some money with not giveing away a % to the franchise. i heard that a local company was bought out by scotts for 65cents on the dollar?
     

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