need help buying a business!!

Discussion in 'Lawn Mowing' started by heavenlydeere, Aug 21, 2005.

  1. heavenlydeere

    heavenlydeere LawnSite Member
    Messages: 109

    hey guys i need a little help here ! i have an opportunity to buy another lawn business , but i dont know what the proper way of appraiseing this business! the gentleman who owns it had approached me 3 weeks ago about buying it and taking over by this next spring, but in the mean time has had health issues that has ended his mowing career, so we are moving our original take over date to now! i will get 45 accounts , which average around 35-40 dollars each and a few that are in the 100 -125 range, i will get 1 2003 60'' exmark lazer,
    two echo trimmers, two snapper 21 inchers,and maybe an 18' cornpro trailer, does any one have even a clue to an approx value on this? if so please respond ! if you need more info on the accounts or equip , i will try to do my best to answer any questions! thanks!
  2. Nosmo

    Nosmo LawnSite Bronze Member
    Messages: 1,216

    Without knowing how many hours are on the X Mark and its condition and the condition of the other equipment and trailer I would just have to guess at this question.

    I'd say probably around 1/3 to 1/2 of retail price on the trimmers, and the same on the 21" mowers. I am gonna let some other folks
    give you some estimates on the X Mark and Trailer.

    As for the 45 accounts you are probably going to have to negotiate
    with him if he expects Goodwill for them. Goodwill is an accounting
    term which means more or less payment for, in this case, the already
    established customer base. Be aware that some of them may not
    stay with you.

  3. Likestomow

    Likestomow LawnSite Senior Member
    Messages: 997

    You will have to determine the local value for the equipment. If it is something you don't want, just determine how much you could sell it for so you don't lose money.

    Now if I were buying the 45 accounts, I would pay 1 month's revenue (4x's weekly, 2x's bi-weekly, 3x's 10 day). I would also want recourse if an account did not remain active for at least four months. If an account cancelled in less than four months, I would want a credit equal to one week's revenue for each month short of the four months. I would pay the cost of the goodwill over a four month period.
  4. Precision

    Precision LawnSite Silver Member
    Messages: 2,995

    equipment at 30-50% of new depending on hours and condition. Condition checked by you own trusted mechanic.

    accounts 1 months gross revenue if not under contract

    up to 2 months gross revenue if under contract.

    I would pay nothing for any account that is serviced less often then bi-weekly.

    pay for accounts in 3 installments over 3 months. Each client that cancels, total gross is deducted from total owed.

    demand a non-compete clause within 50 miles and for 2 years.
  5. heavenlydeere

    heavenlydeere LawnSite Member
    Messages: 109

    thanks for the info ! it gives me some idea of how to approach this thing! thanks alot!!!
  6. Brianslawn

    Brianslawn LawnSite Silver Member
    Messages: 2,004

    pay him used value of equipment based on condition. you get yards for free for buying all his equipment
  7. Precision

    Precision LawnSite Silver Member
    Messages: 2,995

    That will never happen. And if it does, remember the adage, you get what you pay for.
  8. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Messages: 1,154

    Account value = Yearly revenue X 10% X years serviced(1-5).

    So if you have a $1000 a year account it's worth $100 if it was serviced for 1 year, $500 if serviced for 5 years or more.

    These only hold up if there is a contract or signed service agreement and there is documented history with the client. Knock off the last number (years serviced) if no contract.

    So picking up $20000 worth of good customers (3-5 years) should be around $6-10k. For all others it would be about $1000.

    These numbers are right on line with the amount of advertisment you would have to buy in order to obtain that revenue.

    Good customers are hard/expensive to get.

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