Whats It Worth ?

Discussion in 'Lawn Mowing' started by Kickin Your Grass, Jan 30, 2007.

  1. Kickin Your Grass

    Kickin Your Grass LawnSite Senior Member
    Posts: 479

    I had a small LCO stop by today and tell me that he is getting out of the business. He said he has been called to be a assistant pastor at a church. I have talked to this guy while out working before and he has always seemed to be a nice guy.

    He has a 48" Scag with 21hp Kawasaki, a 10x6-1/2 trailer, and about 25 properties. The Scag is 4 years old and has 676 hours and seemed to run good. The trailer was ok but could use some paint. He said he makes around $2,100 per month off his properties. About 5 are weekly and 18 are every 10-14 days. 2 call when they need done.

    My question is:

    Whats the mower worth? How do you price lawns when buying from another company thats closing? How do you even gurantee that his customers will stay when he closes?

    I'm guessing the trailer is worth about $750

    I don't even need the equipment considering I have everything I need but he wants to sale it as a package deal. Whats a good offer to make for the lawns and is it even worth messing with?
     
  2. DiyDave

    DiyDave LawnSite Bronze Member
    Posts: 1,695

    Take the equip. out of the equation for now. Do some math on the accounts. If this guy is running a straight operation, you know what you would make on each of these lawns. You also know about how much it would take to acquire these accounts (advertising, leg work, incidentals). I would offer him the actual first month's receipts from these accounts. This will encourage him to help in the transition. In the real estate world, when an agent rents a house, he gets the first months rent as commission. This seems to be more than enough for his goodwill and equity in a business that he started. There is no way to guarantee his customers will stay, that is the risk that you take in buying him out.
     
  3. BTLS

    BTLS LawnSite Member
    from Texas
    Posts: 109

    the only guarantee is...there is no guarantee. they could all drop you immediately or never. you won't know until you start. You might do this..have him send a letter introducing you as his new partner. you begin cutting the lawns and kind of smoothly swap everything over to your name(payments, contact numbers, etc.) In my experience, that's the best way to commandere someone else's clients. good luck- Ben
     
  4. IN2MOWN

    IN2MOWN LawnSite Platinum Member
    Posts: 4,993

    First things first is I would sit down with ALL his customers and find out how many are staying with you. Make sure you are VERY clear on terms with them of how you run your company.

    I would then ask to see his books for the last 2 years. Make sure you know how much he is making.

    As far as how much to offer...I would offer him one and a half months profit for the accounts he gave you for the whole deal. Equipment and all if everything pans out and seems legit.

    Also make sure he signs a no-compete clause for the next year.
     
  5. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Posts: 1,776

    The biggest thing to remember is that you will probably end up with similar equipment that you may not need. If the equipment is the same and must be auctioned, then the auction value is all it's worth. I wouldn't pay a lot for the equipment due to this fact.
     
  6. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    Honestly I don't think the business is worth much. Most of the customers are every other week, and some call when it needs to be done. These are the type of accounts most of us try to get rid of. I definetly wouldn't to BUY one, let alone a boatload of them.

    Not much in the way of equipment either.

    I would pass on this one, ou wouldn't really be upgrading your business.

    Don't mean to sound so negative, im just pointing out what I see. The right deal will come along. 30 weekly high end accounts w/contracts, and a late model ZTR, handhelds etc........jump on that one if you want to buy something.
     

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