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buying out another buissness

Discussion in 'General Industry Discussions' started by Frontstreetlawns, Jun 4, 2007.

  1. Frontstreetlawns

    Frontstreetlawns LawnSite Member
    Messages: 168

    Ive been approached by several different companys or solo operaters that are thinking about getting out of the lawn care indistry, all for legit reasons, how do you know if there price is ligit or whats resonable or way to high?
     
  2. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    First thing you do is ask to see their past Federal tax returns (3 years min.) which you and your accountant need to review.
     
  3. Mountain Peak

    Mountain Peak LawnSite Member
    Messages: 203

    I've bought out two companies in the last two years. Around here about one month gross sales is all I would pay and that is only if:
    1: they have written contracts. You don't want to buy the guy out and then have all of his customers leave you.
    2: tax returns, like stated above. You have to make sure he's telling the truth. If the numbers don't match up then run away. Everyone always thinks that their own business is worth more than is actually is.
    3: See if they are willing to drive out to each customer with you and introduce you to them.
    4: No compete clause. Make sure they don't just jump back in the next spring and take all of those accounts away from you again.
    5: I'm sure there are a lot more things to look at... anyone else?
     
  4. Frontstreetlawns

    Frontstreetlawns LawnSite Member
    Messages: 168

    thanks guys anyone else?
     
  5. Icemanku

    Icemanku LawnSite Member
    Messages: 190

    Can anyone send me a copy of a contract you give your customers?
     
  6. americanlawn

    americanlawn LawnSite Fanatic
    from midwest
    Messages: 5,944

    TruGreen pays pretty well, but they requirements. Don't know if they're buying right now or not. Certainly worth a phone call.
     
  7. americanlawn

    americanlawn LawnSite Fanatic
    from midwest
    Messages: 5,944

    Tru Green pays pretty well.
     
  8. Mike Leary

    Mike Leary LawnSite Fanatic
    Messages: 23,090

    I sold my bizz for my best year's profit....it's a lawyer deal..taxes, etc.
    I was lucky, I knew & trusted the buyer & all the suggestions are good.
    The "not to compete" could be tricky & a lawyer could write something like
    "if the client chooses not to use the buyer or the would-be client is more
    comfortable with the seller, this does not fit the "not to " clause.
     
  9. Bigray

    Bigray LawnSite Member
    Messages: 140

    i have also considered buying and or selling my LCO
    RULE OF THUMB IS 3-4 months of gross
    30 day stay on / training
    non compete for 3-5 years for said accts.
    guarantee accts for 90 days
    verify acct. cust. & billing
     

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