acquiring an existing lawn business

Discussion in 'Business Operations' started by Eliteenvironments, Dec 6, 2018.

  1. Eliteenvironments

    Eliteenvironments LawnSite Member
    Messages: 15

    I have a friend that was recently offered the position of his dreams and needs to unload his small lawn care business. Im looking for some thoughts and ideas on what would be a reasonable asking price for existing accounts and equipment. Im not looking for the typical lawn site pissing match. I know based on past experience that there are some on here that preach about not buying accounts...yada..yada…yada. What I am looking for is positive ideas and suggestions. I need to make a decision relatively soon. Im leaning on offering up a small amount up front with recurring payments based upon which accounts stay active after transition so I am not hung out to dry on all of them. Thanks in advance to all that can shed a little insight and "help".
  2. DA Quality Lawn & YS

    DA Quality Lawn & YS LawnSite Fanatic
    Messages: 10,224

    I know a business broker well, who has sold lawn businesses. He said 2x-3x annual sales for well established, growing business with LLC or corp in place.
    Eliteenvironments likes this.
  3. knox gsl

    knox gsl LawnSite Fanatic
    Messages: 6,943

    I've bought and sold accounts this way and it's worked well. 2 to 3 months worth of billables is a fair amount if these properties are making good money.
    tdoeizreal and Eliteenvironments like this.
  4. OP

    Eliteenvironments LawnSite Member
    Messages: 15

    thanks for the feed back. owner is asking 3 months. Im just not sure what the going rate is. Would you happen to know a way to price used equipment other than looking on ebay?
  5. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,546

    2-3X revenue or 2-3X profit plus owners ad backs?

    I'll sell tomorrow if I can get 2-3X revenue...
    tonygreek, Jack Hammer, KAZ and 10 others like this.
  6. knox gsl

    knox gsl LawnSite Fanatic
    Messages: 6,943

    Whatever you 2 agree to. This time of year lowers the value of everything youryo wanting to buy but he may be able to get top dollar next April.
  7. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Messages: 17,723

    Name and number please...been around for 85 years.
  8. Rockbridge Lawn Care LLC

    Rockbridge Lawn Care LLC LawnSite Bronze Member
    Messages: 1,089

    get a fixed asset list and equipment depreciation preferably from their last tax filing. That is what the business is worth on paper.....

    accounts are 50% this way or not....not transferable and severable or loyal for that matter......I would go into the bargain table only offering 2-5% of the net revenue per account that you want...

    so a regular $35 cut (28cuts a year) @ 15% margin in account is worth about $147 for me to purchase. (980 X 0.15) and I want a bulk discount:)
    LawnVeteran likes this.
  9. DA Quality Lawn & YS

    DA Quality Lawn & YS LawnSite Fanatic
    Messages: 10,224

    Seems you guys are shortchanging yourselves if you ever want to sell. Are you getting these figures from brokers or did you derive them yourselves?
  10. gcbailey

    gcbailey LawnSite Gold Member
    from WV
    Messages: 3,050

    If he currently has some "good" accounts, make sure meet the owners real quick! We've been watching a well established company around here that the owner sold out to a guy just starting late in the summer. He's already lost 2 locally owned commercial accounts that were each over $40k a year. Apparently he cares nothing about retention and only about the "newer" equipment/trucks he got.

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