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15--20 Commercials for sale

Discussion in 'Business Operations' started by TPC Services, Jul 5, 2010.

  1. TPC Services

    TPC Services LawnSite Member
    Messages: 20

    Heard through the grapvine that where is a local lawn care company wanting to get out of the business. they had been posting selling the hole company for $175K. Now it sounds like they have had no real takers on the equipment an are now selling off there clients they have. they want $20K for the 15-20 Commercial client contracts they have. Story is they make on average $50-$70K for lawn care and landscaping ( I.E. mulch beds stuff like that I'm guessing) an around $50-$100+K in snow removal. Is this worth the $20k they want? I was thinking it maybe if they guarantee coming on line again for next year due to our season being 1/2 over. I Have not contacted them yet so I do not know the size of these commercial properties they are saying they have!!
  2. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    before you do anything, do a ton of home work.

    I have herd of someone purchasing a company only to find they transfured a ton of debt too.
  3. TPC Services

    TPC Services LawnSite Member
    Messages: 20

    I was think about asking the address to these places to see them first hand. see either his books to see what each job is costing him hr, an maybe labor cost wise. how fast the clients payout to him. things like that. am I missing anything else.
  4. Hell on Blades

    Hell on Blades LawnSite Senior Member
    Messages: 513

    If he is reputable and willingt o sell, he should allow you to see the whole packeage with just a non-competition contract. That protects him, if you don;t buy.
  5. Raymond S.

    Raymond S. LawnSite Senior Member
    Messages: 996

    yeah it's worth it if they sign on with you through 2011 (that's 1 1/2 summer seasons and 2 winter seasons. As for the debt, it wouldn't pertain to you. You'd be buying customers only. Make sure no part of the business transfers to you and at the end of the day customers A B C etc. are now under contract with your company. If their gross is what you say it is then really it's a no brainer if they sing through 2011 like I said.
  6. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,250

    Who cares about gross numbers when net is everything. I would have my accountant review the last three years of tax returns. Might be a reason they are selling the business?
  7. Raymond S.

    Raymond S. LawnSite Senior Member
    Messages: 996

    He's not asking about buying a business, he's asking about accounts. The gross on those accounts is all that matters. If you came to me with your accountant wanting to look at my books when all I'm selling you are customers I'd tell you to take a hike. His net earnings are irrelevant in this case. My net and yours would be completely different with a set group of customers.
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  8. unkownfl

    unkownfl LawnSite Gold Member
    Messages: 3,837

    What really matters is whats owed on the paper from when the payments start going to you and until they're paid in full. My father sells paper about every other year and gets about 70% of whats owed to him in a lump, but thats with cars and thats secured unlike those accounts. You need to see whats left on the paper to asses a value to it.
  9. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,250

    I agree that gross would be a starting point but wouldn't you want to know the cost of goods sold and any subcontract costs involved? The post mentions some pretty vague numbers and snow can be unpredictable year to year. I want to see how the business was run and where any economies of scale might apply. My experience has been that asking for corporate financials is pretty common in a sale and I would be leery if they wouldn't provide them.

    I want to have the name of the company included in the sale as well as a non compete signed for the customer base. What are the chances the owners are out of the industry for good? Could they come back at a later date and solicit your purchased customer base?
  10. Raymond S.

    Raymond S. LawnSite Senior Member
    Messages: 996

    yes you are correct in terms of wanting to know some of his variables such as materials and any subcontracted costs if any. That's not finding his true net though. His "net" doesn't really concern you as it's more of a total business net not the net from these customers.

    I'm not necessarily sure a noncompete would be justified here if they sign on say through 2011 like I suggested. If you want this guy out for X amt. of years, then I think you'd have to purchase his business, not just his accounts. In which case obviously let's open the books and get down to the nitty gritty.

    I've done the above mentioned both ways before. I have bought customers only and also a complete business, equipment and customers. When I got just customers, I got just that. An intro letter, signed proposals for the season, brief walkarounds and away I went. When I bought the complete business, I got the whole nine yards. It was more money obviously because of the equipment and long history with some of the customers, but I got a good look at his numbers and a more thorough rundown of the customers.

    On a side note, I have found with both transactions that the company with the longer history of accounts turned out to be more of the PITA accounts too. There were many things thrown in by the previous company at no charge that I simply wouldn't do. The company built a relationship with these clients and things got personal. When it's personal the customer will try their damnest to take advantage of you. There was some headbutting at first but it has all worked out (I think) in the end so they know what to expect and vice versa.

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