Irrigation Company worth?

Discussion in 'Irrigation' started by djagusch, Jan 12, 2012.

  1. sprinklerchris

    sprinklerchris LawnSite Senior Member
    from Georgia
    Messages: 281

    The going rate buyers are paying is about 75 cents per dollar of steady service sales. Steady service sales of $100,000 = $75K enterprise value.

    Equipment and "install business" is not worth much these days.

    Messages: 18,668

    I'm sure there are exceptions but rich folks aren't looking for irrigation companies to buy. In most cases it's a struggling just started usually young entrepreneur. If you can being able to sell it to your employee or employees seems the most viable. When I sold my biz money was secondary. I was more concerned with my customers getting a fair shake in the deal with continued good service. So I paid Henry 10% to stay on and had arranged a percentage of gross profits for me to stay on for a year to help with the transition. A couple of the original partners who are no longer with them didn't like my riding their butt because I wanted to make some good money for all my effort. So after a couple of months I was phased out. I suspect if John had it to do over again he'd have taken more advantage of what I had to offer from an experience stand point. Besides having Henry I'm not so sure my customers are happy from the few that called my cell phone. Thank goodness I was stingy about giving that number out.
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  3. Wet_Boots

    Wet_Boots LawnSite Fanatic
    Messages: 50,386

    my CPA advised me to learn the phrase "Do you want fries with that?"
  4. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Messages: 4,350

    The last 3 years I have increased sales approxiamtely 20% each year (mow/fert/plowing). So seeing the decrease trend shows me that there is potential if properly ran.

    Trust me the cross promotion of fert/weed control I see being huge. Of course after I treat them with great service.
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  5. Mdirrigation

    Mdirrigation LawnSite Gold Member
    Messages: 3,708

    ask yourself how long would it take to accuire 320 irrigation customers from sctatch , how much advertizing money would you spend . That price sounds a bit cheap to me , all depends on the equipment and supplies . I spent that much on my vibratory plow back in the 1980s with no customers , just a wing and a prayer . Like some one said dont buy the business , buy its assets , customer list and phone number . Rename the business something very similar . That is a great start for customers , it gives you a foundation to build on. Work out a financial arrangement with the guy , since there arent many takers , its only worth what you are willing to pay for it .
  6. Mike Leary

    Mike Leary LawnSite Fanatic
    Messages: 23,148

    I sold mine on a wing and a prayer; held paper for six years. I think we had a couple of glitches, they paid the late charges and they now own the business. Bottom line: trust.
  7. muddywater

    muddywater LawnSite Bronze Member
    Messages: 1,813

    If the guy hasnt sold it in a year, it seems like a ripe time to lowball him. 5k would be worth the risk.
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  8. GreenLight

    GreenLight LawnSite Senior Member
    Messages: 521

    From a distance, it looks pretty interesting. 320 BILLED customers for $25,000 and an old 200 customer list. Then if you do some number crunching I would be quickly scared off, in fact this company probably borders on losing money after overhead. Im not sure what his rates are, but they certainly don't appear high enough.

    Just adding up all billable service customers and including the plowing customers you have a grand total of $60,000. That means each of those 320 customers you just inherited is worth $187.50 of sales per year or roughly $16.00 a month / $48.00 a quarter. The total value of each customer is simply nowhere near the incurred headache, accounting, billing, insurance, licensing, labor, etc, cost.

    For $60,000 of service work, you basically have to be a one man show to make any money. There are 320 possible headache calls per day that might not be billable or worse yet, you might occasionally make a mistake and face some liability. 320 customers can keep a phone pretty busy with just neediness and unbillable time. It sounds like to me, unfortunately these customers have no real value to you.
  9. Wet_Boots

    Wet_Boots LawnSite Fanatic
    Messages: 50,386

    Act quickly! Before a big conglomerate steps in....

  10. Mike Leary

    Mike Leary LawnSite Fanatic
    Messages: 23,148

    Agreed; the smart buyer takes a hard look at the owner, the books and the clients.

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