buying another company's customer list

Discussion in 'Starting a Lawn Care Business' started by turf chaser 68, Feb 5, 2009.

  1. turf chaser 68

    turf chaser 68 LawnSite Member
    Messages: 1

    I have a company in our area that is looking to get out of the business. He wants to pursue other opportunites. last year he billed $75,000 total, with most of it coming from mowing and cleanups. also some fertilizing and other misc.... We are trying to come up with a fair price for the both of us but would llike some input on this. his company was in business for 4 years. 40% of this total came from commercial accts. any advice appreciated......
  2. Brian James

    Brian James LawnSite Member
    Messages: 22

    This may come across as a cop-out but it is only worth what someone else is willing to pay. If the clients are signed to contracts I would say he should get 1-2 months billable from those-averaged across the whole year. If they have nothing in writing all you are getting is a list of leads which are at best worth a couple dollars more than 2 bucks each in my opinion. We don't know the whole story so it may be a situation where he has gotten a series of "Dear John," letters or calls from last years customers. Investigate what you are buying and do not over pay in these tough economic times. I'm not trying to be negative about the other guy but this is a buyers market for everything since their are so few buyers out there. Good luck and best wishes for a profitable season!
  3. scottgalat

    scottgalat LawnSite Member
    Messages: 72

    The commercial accounts may be scary. There may be an ending date on the contracts and new bids will be considered at that time by the customer. If thats the case, I'd not give them much value other than a percentage of the actual earnings stated in the contracts.
    If they are open ended commercial arrangements, where basically you are the lawn man until you screw up, they will have more value.
    Same with the residential. If I was a buyer, I'd be jump on it if I could get it for what will be 1/4-1/3 yearly earnings.
    Is there owner financing and you can't afford to buy it any other way?
    Be willing to pay more for that. All the properties in a tight route? That's worth a bit more too. Can get all the work done relatively quickly, worth a little more. If it had these things in it's favor, I'd go as high as half, as long as I had a few open work days available for expansion...and you can live on the result. Call me before you take my advice and make an offer, some specifics might be overlooked that need considered. Scott

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