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Large Acquisition of Landscape Maintenance Company

Discussion in 'Business Operations' started by G-Jacobsen, Oct 6, 2019.

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  1. Green Mentorship

    Green Mentorship LawnSite Senior Member
    from Heaven
    Messages: 334

    Here's another angle. If most of the work is govt and you are getting the same certificates, then you can win these yourself without buying or paying him anything. Better yet, these awards will come in smaller chunks vs the large growth all at once buying him out.

    Real talk, it takes time to become a leader of a large company. I'm not the leader I was when we were 1 mil a few years back. As the company grows, you and your leadership skills should grow too. To buy a co of that size and have to put on that much more leadership skills overnight will likely be the hardest part of this deal IMO. You'll fumble a lot of plays and it's going to cost you.
     
    snomaha likes this.
  2. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,742

    Was thinking the same thing - the value is in the 8a designation. If you dont get that in the purchase, are you really paying 1.1MM in commision for 6MM in future revenue?
     
  3. OP
    OP
    G-Jacobsen

    G-Jacobsen LawnSite Member
    Messages: 40

    Yup, I hear you guys on all those points. We can definitely get those same certifications because my wife is a minority as far as the 8A and some of the others. I do think about just getting at those contracts on our own and not buying him out but my biggest thing is as you know finding New competent workers. Essentially in buying this other business I would be skipping the growing pains of growing your business to that size. So, my thoughts are it being a better headache if you will learning how to manage that many people and lead that many people but knowing that these employees are already experienced and worked for this company and made this company the money that it's made versus getting contracts and hiring guys who don't show up and cause you to have a badd name with the federal government because you can't fulfill the contract because you can't find quality people. That's kind of my thought process.
     
  4. Mark Stark

    Mark Stark LawnSite Fanatic
    Messages: 11,000

    Spending 1.1M and thinking it will jump ahead of employee issues is a very had idea. If that's a huge concern, hire a decent HR person for 50k year and pay them an additional bonus on finding, hiring, help retaining good employees.

    Spend something like 75k year hiring an awesome ops manager who can further assist with employee hiring/issues and has a good knowledge of government contracts.

    All that for about 125k. Now just go sell the work.
     
  5. OP
    OP
    G-Jacobsen

    G-Jacobsen LawnSite Member
    Messages: 40

    Mark Stark, the business in question already has those office employees in place that have been with company for a long time. I wish it was as simple as just going out and finding good people. Those people could run your business into the ground. I could "try" to find people to take on those tasks but that doesnt mean they will do it the way you need them to. They may be worthless at finding good people or managing them. The point is the people that run this business will essentially continue to run it. I do t have to change a thing if it's already working. I would just tweak it as I see fit. The business has already filtered through the crappy people to get to the right people.
     
  6. OP
    OP
    G-Jacobsen

    G-Jacobsen LawnSite Member
    Messages: 40

    A key selling point to buying any business large or small is that the key management personnel that's made that business what it is is going to stay in place and they could quit, that is always a possibility but it's unlikely unless you're a dipshit that you're going to drive these people off as soon as you acquire the new business. The other point in buying a business that's already where you want to be is that you don't have to go through all those headaches finding and retaining employees in order to grow your business to that level, the business has already done that for you. I do understand that it's not a magical thing where I'm not gonna have to deal with anything else but there is such a thing as having layers between you, the customers, the employees, and all the other headaches. Essentially the headaches of any business are spread out over all your key management versus having all those headaches squarely on me as I try to grow my business to that point. I definitely see every point that you guys are making though.
     
  7. hal

    hal LawnSite Fanatic
    from Georgia
    Messages: 5,814

    But if they cancel those contracts what ya got?
     
  8. OP
    OP
    G-Jacobsen

    G-Jacobsen LawnSite Member
    Messages: 40

    If they cancel those contracts, the business wouldn't be worth much other than the real estate and assets. Those contracts must transfer or theres no point in purchasing the business.
     
  9. OP
    OP
    G-Jacobsen

    G-Jacobsen LawnSite Member
    Messages: 40

    I am trying to figure out how to keep everything in place without changing anything. One way is a stock sale but that isn't my expertise I would need a business lawyer to explain and assess that option.
     
  10. hal

    hal LawnSite Fanatic
    from Georgia
    Messages: 5,814

    It's not that hard, just look into it. You can buy up to 99% and pay the original owner a dividend, keep everything the way it is, have two separate businesses.
     

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