looking to buy business whats it worth?

Discussion in 'Business Operations' started by Jwengerd, Dec 15, 2011.

  1. Jwengerd

    Jwengerd LawnSite Member
    Messages: 62

    I'm looking to buy a business that i currently work for. Roughly 90 accounts only 47 of those accounts have a contract thats good for one more year. The accounts total gross $3,263 i believe since only half of the accounts are only "Guaranteed" for 1 yr I am wanting to offer 6 weeks x gross so that would be $19,578. Am I to low? The only equipment that will come with it will be 19hp efi kaw scag tt 61" (1,600hrs) 26hp kaw. vride 52" (1,600 hrs) replaced motor on exmark walk behind 52"(?hrs) Decent shape 6x12 trailer 2 newer sthil trimmmers,red max hedge trimmers,redmax blower ( bout due to be replaced), misc ( wheelbarrows,tarps rakes shovels) 8' boss snowplow with boss salt spreader.
    I Valued all the equipment at $14,215 a really fair value.
    The guy believes the company is worth 50k. I think its worth 34k. Obviously its only worth what somone is willing to pay for it but was wanting your guys opinon. Also he is trying to go off what the sales have grown in the last 5 yrs and what he thinks the can grow in another 5 yrs.... I dont think that this is right you cant predict what sales are goin to be in 5yrs esp. under new ownership. Also any thing i need to look out for warning signs? Thanks
  2. jay12

    jay12 LawnSite Senior Member
    from KY
    Messages: 270

    make him sign a non compete form for atleast five years. Also, see if he will get early renewals on the contract accounts. It may be a long shot but its worth a try. It would be worth more to you if he did that. His price isn't too far off I don't believe.3,000 x 30 weeks is 90,000 it would probably be worth 50 if the equipment isn't junk, especially if he will renew the contracted accounts. Also, are there any snow accounts included
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  3. wbw

    wbw LawnSite Fanatic
    Messages: 5,832

    Do you personally have a good relationship with the current customers? What would you pay if you knew that all of the current customers would stay on?
  4. Jwengerd

    Jwengerd LawnSite Member
    Messages: 62

    Honestly we really dont see the customers that often but the ones that i Do see are friendly and i think they would stay, but it just worries me that over half of his accounts arent in a contract. AS far as getting in good for the following years bid that im not sure of. I would be willing to pay $40k if i knew they would stay.
  5. larryinalabama

    larryinalabama LawnSite Fanatic
    Messages: 18,710

    The customer list is worth 8 to 10 thousand max. So if the equiptment is worth 14k offer 24,000 and stand firm. He cant sell it for 40,000.
  6. Jwengerd

    Jwengerd LawnSite Member
    Messages: 62

    ok, anyone else have opinnions on what its worth?
  7. grass-scapes

    grass-scapes LawnSite Bronze Member
    Messages: 1,552

    Would YOU sell your customer base for 8 to 10 grand MAX?
    I know I wouldn't.

    8 to 10 weeks gross, plus equipment is right around the $47,000 mark. He wants $50K Offer $40K and see where it goes. Non-compete. Offer part of that 40K as a future payment contingent on customer retention. Make sure the level of services is at least equal to what was being provided though.

    for example....if 10 k is contingent on retaining all the current customers for an additional year, and you do crap work and they cancel, that wouldn't be fair to the previous owner.

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