Question about buying pre-existing company

Brent0517

LawnSite Member
Hey guys,
I’m considering buying a company already in existence, located in western Arkansas area. It sells hustler mowers and an entry level brand tractor. It has been in business for awhile (20+ years) and has really taken off the last 3 years or so. Meeting with the owners next week. I’m at a total loss for what questions to ask. I’m at the point of I don’t even know, what I don’t know. I would really love in input of the guys who have experience with either owning a similar company or someone who has gone through the process of buying an existing company. What do I need to be looking for, what do I ask about, etc. thanks so much in advance for any input you have.
 

m_ice

LawnSite Senior Member
Location
IL
For starters you will probably have to sign a NDA. You will need to see their Financials for atleast 3 years. If your asking then I'm guessing you don't know what to look for in those so make sure you have a good accountant and banker to look those over. They will be able to tell you whether the business is a good investment or not, I personally wouldn't take advise over the internet on something like this.
 

JFGLN

LawnSite Fanatic
Hey guys,
I’m considering buying a company already in existence, located in western Arkansas area. It sells hustler mowers and an entry level brand tractor. It has been in business for awhile (20+ years) and has really taken off the last 3 years or so. Meeting with the owners next week. I’m at a total loss for what questions to ask. I’m at the point of I don’t even know, what I don’t know. I would really love in input of the guys who have experience with either owning a similar company or someone who has gone through the process of buying an existing company. What do I need to be looking for, what do I ask about, etc. thanks so much in advance for any input you have.

Do they sell any other product lines? Do they have a service department?
 
OP
B

Brent0517

LawnSite Member
Yes, we have a CPA on our team who is great with the financials. And yes, they started off as a service department (fixing small engines) and that is a major part of the business. And they do offer several other product lines. Apparently they have different products begging them to sell their lines. Thanks for the replies.
 

AlohaMowing

LawnSite Senior Member
Location
Hilo, HI
If the business is worth buying, it is worth spending some money to ensure the purchase makes sense and is done properly. If it is not worth buying, it is better to spend some money to avoid making what could be a very expensive mistake.

This is the time to get an attorney working with you, someone experienced with acquisitions and operations of similar businesses. If you hesitate to spend money on an attorney, consider that to be a sign that you are not truly prepared to buy and operate this business.
 

Where the Pavement Ends

LawnSite Member
Location
Montgomery, AL
You got some great advice already. The numbers are the most important thing, and how confident are you that you can sustain those numbers? Assuming that you already asked why they want to sell. Are the mechanics in the shop certified for by the manufacturers they rep? Is the asking price less than 3 times annual earnings? You need to know every revenue generating source and every expense, and what percentage of revenue those are. A good accountant will help benchmark the business against others like it with similar demographics. Also, are the most productive, profitable employees likely to stay with the new owner? Turning wrenches is probably going to be the real revenue source. Parts through the shop should do well also. Wouldn't think that there's a huge revenue from mowers and hand tools. Lastly, be absolutely certain that you know exactly what you are getting. Good luck!
 

gardiner

LawnSite Senior Member
Location
MASSILLON OHIO
To me. it is too easy to start a mowing business. Therefore I would never buy. I would even hesitate to buy the equipment. If I did it would be a lowballing offer. The equipment needs to be dependable. & you will have to retain the new contract with anyone who is on a contract. Sooner or later.

I have two that told me that they was sold . To a guy they never met.

Customers do not like to be sold.
So if you take the leap and buy him out. Be prepared to lose a few

Myself I watch for lawn mowing business for sale. Then target that area. When advertising.
 

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