What to ask for when buying accounts

Discussion in 'Business Operations' started by New2TheGreenIndustry, Jan 26, 2011.

  1. New2TheGreenIndustry

    New2TheGreenIndustry LawnSite Senior Member
    from GA
    Posts: 854

    I have an acquaintance that is trying to get out of the business and I wanted to know your thoughts on what to look for when possibly making an offer. I know the guy does not use contracts, but has very loyal customers that many have been with him since he bought the accounts about 7 years ago. I am thinking gross sales/net profits, maybe tax returns from the past 3 years. I would also like a breakdown of which accounts are weekly vs bi-weekly and length of time each account has been active. Any input is appreciated.
     
  2. Green Feet Lawn

    Green Feet Lawn LawnSite Member
    Posts: 226

    Commercial vs residential
    How many hrs per week to complete the route
    Solo or with a crew
    monthly gross during season

    I bought accounts last year and I paid 1/2 and when the new customers were notified of the change and signed on, I paid the other 1/2. Only 1 customer did not sign on so it affected the price slightly. The seller needs an incentive to to sell the transfer.
     
  3. johnsonslawnmanagement

    johnsonslawnmanagement LawnSite Senior Member
    Posts: 909

    I wouldn't buy unless the customers contracted with you for at least a year. What happens when you pay him for the accounts and they don't like you or decide to switch service after the first
    month? Better cover yourself with a contract, at the least, long enough to make your money back.
    Posted via Mobile Device
     
  4. Green Feet Lawn

    Green Feet Lawn LawnSite Member
    Posts: 226

    Actually when they signed on, I meant a season contract. Sorry.
     
  5. johnsonslawnmanagement

    johnsonslawnmanagement LawnSite Senior Member
    Posts: 909

    I bought out a company for 3 months income. All accounts signed for 18 months. Retained all but 1
    Posted via Mobile Device
     
  6. CircleC

    CircleC LawnSite Senior Member
    from NW
    Posts: 309

    I bought about 15 accounts last year and things worked out great. Seller called all the clients and told them he was "giving" the accounts to someone else who was working in the neighborhood. All clients were good to go...1st week out he worked with me and we talked with everyone. I paid 2 months revenue...didnt really care about taxes or how long he had them. I paid more for marketing in the spring with little to no results. This gave me instant results with better return.

    Good Luck Dude....
     
  7. New2TheGreenIndustry

    New2TheGreenIndustry LawnSite Senior Member
    from GA
    Posts: 854

    That is not possible. :) If anything the customers service would improve. In all seriousness I know there is a risk without contracts. However I feel I do better work, and if they stuck it out with the other guy, they would be more than happy with me. We have not had a meeting about the sale yet, so it's possible I might pass on the deal if the numbers don't make sense. I am just trying to get my ducks in a row. Thanks for the input.
     
  8. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    Sounds like you got some GREAT pesponses to this post. Thanks for replying.

    I was afraid the drop rate would have been higher.
     
  9. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    Once you come up with a price, you could divide the payments into quarters. The ones that don't stay, you don't pay him. I think you you keep the same prices, they will stay.
     
  10. HenryB

    HenryB LawnSite Bronze Member
    Posts: 1,828

    Often guys give routes away for very little money in this industry. Unless it's scattered or not making money. Our routes are a business and worth a good buck. A local guy with 100 accounts (full service) wants $100k for his biz. He net $125k a year I think it's a great deal for the right buyer some local LCO's think he's crazy. If I had more time and money I'd really consider it.
     

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