LCO buyout- what is it worth?

Discussion in 'Lawn Mowing' started by KS_Grasscutter, Jun 20, 2008.

  1. KS_Grasscutter

    KS_Grasscutter LawnSite Gold Member
    Messages: 3,335

    Ok, so the opportunity has arose to buy out a local competitor (who shall remain un-named in this post since I know I aint the only Hutch dude on here). I think their price is a little high, but think there may be some room to work. They have 20 lawns (mostly residential, $30 lawns, which is on the high end of average "here"). They also have 50 fertilizer accounts (most are 5 apps/yr). Equipment included is a beat up F150 with a hoist under a regular bed (would move hoist to my truck, then sell their truck), a fairly nice 6.5x12 PJ trailer (would keep), a tiny Hustler Fastrack with catcher (would be sold) and a 42" Grasshopper frontmount (would be traded on a 723). Also a full line of Shindaiwa stuff. I figure the equipment is all worth $5,000 to $7500.

    The weekly gross on mowing is $700, which would more then make the monthly payment on a 4 year loan for their asking price.

    How much would YOU pay?

    Also, I need these accounts very badly, because I have an additction to new iron, and have payments to make:hammerhead::laugh:
  2. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Messages: 2,810

    I can tell you I wouldn't be makin' a monthly payment for 4 years...

    How much are the fert customers worth?
  3. KS_Grasscutter

    KS_Grasscutter LawnSite Gold Member
    Messages: 3,335

    That is the main thing I was wondering. I dont have a CLUE really... say $50/app, so $250 per year/per customer. So like $12,000/year. I would guess that half that would be net profit?
  4. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Messages: 2,810

    If you don't have a clue.. I'm guessing you are not a licensed applicator?

    This business sounds worthless to me...... spend some money and time advertising for yourself.

    THEGOLDPRO LawnSite Fanatic
    Messages: 5,222

    yeah i wouldent waist my money on a business thats not bringing in much cash. sounds like a worthless business,
  6. KS_Grasscutter

    KS_Grasscutter LawnSite Gold Member
    Messages: 3,335

    I am not a licensed applicator yet, but turn 18 in a month (july 20th) and will be as soon as possible after that. The apps are all caught up now, and everything for the rest of the year is straight fert anyway, so I could apply without a license if I had to until the first app next year (can apply straight fert. in KS without lic.)

    I have never had much luck with ANY advertising. Around here, customers seem to get with their LCO and stay there, for the most part. Or they go to one of the 4 or 5 really big guys that have a name and reputation built up for themselves. That's where I will hopefully be in 20 years lol.
  7. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Messages: 2,810

    Well have a happy b-day. That is my son's b-day too.

    So.. lawns in KS don't need weed control in the fall. Hmmm

    My advice is to pass on the opportunity... especially the fert side of the biz until you know what you are doing and are qualified. If you really want the maintenance accounts... offer $2100 for just the accounts.
  8. David Gretzmier

    David Gretzmier LawnSite Gold Member
    Messages: 3,645

    it's tough to make a go of it on buying other LCO's . some of the clients will fire you quickly. they don't like to be sold, period. I think I could easily have 20 35 buck lawns if I spent 500 bucks in advertising or flyers in a summer. so my opinion is the accounts are worth 500 bucks. the chemical accounts have value. they are harder to get and hold better profit. it would take 2000 in advertising or so to pick up that many, maybe 4000, so they are worth somewhere in there. the equipment should be valued on what you could trade it in for, no more.

    unfortunately, most lawncare opererators think thier business is worth what it brings in in revenue per year. and some are, that are bringing in 1 million per year and profitting 300k per year. at the lower levels, you pay alot less.
  9. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    It is worth what someone else is willing to pay.

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