Buying Business

Discussion in 'Lawn Mowing' started by HLM86, Nov 18, 2007.

  1. HLM86

    HLM86 LawnSite Member
    Messages: 120

    The owner of the business I work for has been wanting to sell his business to go into another. The business does about 85% lawn maintenance and the other 15% of work is landscaping and irrigation. There are about 100 residential accounts and about 12 commercial. No residentials are under contract. The only equipment I would want is:
    -Exmark Lazer Z 60" w/ 25 hp Kohler and a Ultra-Vac, it has 400 hours on it.
    -2 or 3 Stihl FS80 trimmers
    -And probably a bunch of miscellaneous irrigation pieces
    The business grosses roughly $160,000 a year and records and statements can be shown for this.

    What would yall be willing to pay for this? An estimated price has been presented, I want to know if its fair. Also who should I get to put a value on this business, like a CPA or what? Thanks for any help.
  2. HLM86

    HLM86 LawnSite Member
    Messages: 120

    Disregard the part about "85% lawn maintenance and the other 15% of work is landscaping and irrigation". We do about 5-6 landscape/irrigation installs per year.
  3. J Hisch

    J Hisch LawnSite Senior Member
    Messages: 952

    First you have a great advantage of knowing what the business acutally does. The value is in what you are willing ot pay for it and what he is willing to settle for. 75k to 110,00 but that is based upon how much you have to have up front or how much he is willing ot hold. If it has to be 100% buy out then I would hold close to 75k range, if he is willing ot finance some of it for you then be prepared to offer more. Plus residental under contracts is a waste fo time. You may lose a few but not enough to worry about. Most peopel just care if the grass is going to get cut and if the job is going to be what they want and is the price going to stay close to the the same. If they care who cuts it get rid of them.

    SLCINC LawnSite Member
    Messages: 110

    Excellent advice, how did you come up with that price. Is there a certain calculation that you did?
  5. P.Services

    P.Services LawnSite Fanatic
    Messages: 6,319

    i would never pay that much. what if all the clients drop you and go with another lco? then you have a 100k exmark to show for it. 50 grand will buy a ton of equipment and the second 50 grand invested into advertising will get you way more the 100 accounts.
  6. EJD Lawnpride

    EJD Lawnpride LawnSite Senior Member
    Messages: 313

    Find out how much he gets per/cut/customer. offer 3x the cut price per customer. As for the equipment I'd say $4,000 for the exmark and $125/trimmer. No need to really pay more for the stuff. You can find equipment on e-bay . The most attractive deal is the accts. 100 is a good # to start out the gate with. Try to get the owner to go with you to the accts. to introduce you and try to get them to sign contracts! No contract means no guarantee,no need to pay for uncertainties.
  7. quietone

    quietone LawnSite Member
    Messages: 39

    Gross sales and number of total accounts is just one factor of the situation. A common formula to value any business it 2.5 times earnings. So if this company earns the owner say 40,000.00 a year it is worth around 100k. You should hire any attorney and/or a business broker. They will help you set up the terms etc.
  8. lasher66

    lasher66 LawnSite Senior Member
    Messages: 399

    I have 100 accts and I wouldnt sell for less than 75k. If most of them are residential, most likely they will not all sign contracts. I think as long as you do a good job, they will stay with you. What are the chances that all 100 accts would quit? maybe a couple.

  9. growabiz

    growabiz LawnSite Member
    Messages: 22

    Typically, going rate for a business is no more than 2 months revenue+FMV of equipment--because there is no guarantees that the customers will stay--if you can it would be better to purchase new equipment unless you have been familiar with how well the equipment has been taken care of--still be cautious--the value of the mowers decrease $50-100/hour of use so if a mower has 1000 hours on it--a $7500 lawn mower may only be worth $2500.

    If you are unable to purchase it at that price it may be wise to start on your own--as another previous poster stated--you can grow your business or buy a lot of equipment for $50,000

    Hope this helps.
  10. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    I don't remember the last time I bought a 727 Jumbo Jet when all I needed was the peanuts, thou the marital concept reminds me of it.

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