$$$ For Clients

Discussion in 'Business Operations' started by Mark Iannini, May 14, 2019.

  1. Mark Iannini

    Mark Iannini LawnSite Member
    Messages: 7

    I was contacted by another company who is "selling" their clients off. Some of these clients are integrated into some of our runs, and it may be beneficial to add about 20 or 30 more in the mix. Has anyone ever experienced purchasing clients. If so, what was the formula to figure how much you paid per client. I never "purchased" clients before. Any insight would be helpful.

    Thanks!
     
  2. BigJlittleC

    BigJlittleC LawnSite Fanatic
    from Chicago
    Messages: 6,053

    The search function will yield a ton of results for this question.
     
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  3. GreenscapeCT

    GreenscapeCT LawnSite Member
    Messages: 240

  4. weeze

    weeze LawnSite Fanatic
    Messages: 16,771

    i wouldn't pay anything unless the customers will sign a contract to stay on board all year long.
     
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  5. wbw

    wbw LawnSite Fanatic
    Messages: 6,410

    First of all residential contracts are worthless in this situation. You have to determine the value of the customer base. Keep a couple of things in mind.
    1. Full payment up front should equal substantial discount on the purchase price to reflect the increased risk. I would try for payments based on retention.
    2. It is much easier to purchase a business than to sell a business. The seller has to sell (or walk away). The buyer is under no such pressure.
    Properly structured, a purchase can be a wonderful thing.

    Good luck.
     
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  6. OP
    OP
    Mark Iannini

    Mark Iannini LawnSite Member
    Messages: 7

    Thank you for your input. I'm going to keep in mind that we are in no pressure to purchase the yards. Would be nice to have as they are close by, but in the end, we are in the drivers seat. Thanks!
     
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  7. Erik R

    Erik R LawnSite Member
    Messages: 40

    For starters, when comparing yourself to the seller do you see yourself having the capacity to manage these accounts better than the seller? If so, then I've heard of people buying out competitors for three times the monthly revenue but probably not the best way to do it. I wouldn't pay more than the monthly revenue plus any estimated add on services you are capable of doing in that first month. Such as aeration, cleanups, tree service fertilization etc. Be realistic with what can do or not do in the next 30 days after purchase and don't pay more than what you are sure that you can get back. You are essentially taking a gamble since none of the customers are locked into a contract. If you do end up buying make sure that the seller signs a non-compete agreement so they don't come back and try to take their business back.
     
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  8. Oxmow

    Oxmow LawnSite Bronze Member
    Messages: 1,065

    Erik, I'd like to put you across the table from Ted and just watch...:popcorn:
     
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  9. Erik R

    Erik R LawnSite Member
    Messages: 40

    I haven't had the pleasure...
     
  10. Cam15

    Cam15 LawnSite Silver Member
    Messages: 2,559

    Just be ready....
     
    Oxmow likes this.

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