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Business Broker made offer

Discussion in 'Florida Lawn Care Forum' started by Ric, Aug 9, 2011.

  1. Ric

    Ric LawnSite Fanatic
    Messages: 11,969


    This is not an unusual thing, In fact it is very common to have these head hunter contacting smaller Pest control companies. But today I am rained out. So I talked with the guy who of course acted like he was my long lost friend and here to really help me out.

    His up front offer was 80 to 85% of a years gross for each account but with a 20% hold back to cover any lost accounts. Also I would have to work for them for one years time. These first offers are generally higher to catch your attention. Of course he wasn't offering this, only working with the company that wanted to buy accounts. Therefore I would have to sign a contract before going any farther. Now his offer was low to start with, even in this economy. In Fact I want to believe good Spray accounts are at a premium because of the weak Economy. I turn a 60% net profit on L & O as a one man band and that is as good as it gets. My Ant control and structural is 80+% net profit which might explain why I lean that way.

    Last time I sold out I got 100% of a years gross with no hold back. But my first offer was from TG/CL who waited until the closing to spring all the traps. I kindly walked out of the lawyers office rather than grab my ankles. Instead I split the accounts and sold to smaller guys who I knew would do the customers right.

    I am not ready to sell out and haven't followed current business selling prices. But at one time it was common for good mowing or maintenance accounts to go for 3 months gross or 25% of a years gross as a average selling price. Pest Control accounts sell for a 100% of a years gross.

    Now before all you guys with out any business back ground start complaining about how you would not pay that kind of money, THINK. What is your business Worth? and what would you be willing to take for it?

    Back when I had the "big show" (as my buddies called it) I bought out several smaller Mowing guys. I had the pesticide license and could up sell those accounts etc. I also culled accounts and resold them if they weren't in my Area. (I AM NOT TRAVELING FROM PODUNK TO EBF Ia) But the point is you can build accounts easier and less costly by purchasing them. Why else would I be getting 5 to 6 offers a year to buy me out?????? BTW it is the smaller companies that are more valuable. Think of the reason why. They easier to absorb into your present operation without causing great management problems or stress. They also have a lower total selling prize which is easier to amortize. An other factor is smaller company should have better accounts because they don't take on all the jerks to fill a quota. In my case I have culled all the losers years ago and I only take on accounts I know will not be a PITA. TG/CL and their wannabes can't say no to any customer and that is one of the reason they do so poorly.

  2. bugsNbows

    bugsNbows LawnSite Member
    Messages: 170

    Amen. When Massey bought out Middleton, it was (from what the insiders have told me) a complete cluster fark. Acquisition has always been a "quick growth" strategy.
  3. justanotherlawnguy

    justanotherlawnguy LawnSite Bronze Member
    Messages: 1,282

    Middletons service has gone in the toilet since Massey bought them!!!
    Posted via Mobile Device
  4. Ric

    Ric LawnSite Fanatic
    Messages: 11,969

    With the exceptions of National Structural Pest Control Accounts, Massey is not in my small town. I have watched a Massey structural tech drive a unmarked car every time I see him. There is not a lot of equipment needed for structural so a car trunk is big enough. But being unmarked is illegal.
  5. Landscape Poet

    Landscape Poet LawnSite Gold Member
    Messages: 3,638

    I agree with you on this. Massey is far from the worst in the industry but the accounts that I have that were middleton have not been keep up to the same standard.

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