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Question about selling accounts along with equipment

Discussion in 'Lawn Mowing' started by Joel B., Feb 28, 2011.

  1. Joel B.

    Joel B. LawnSite Senior Member
    from MN
    Messages: 458

    I can figure out what to sell equipment for but how about accounts? Is there a formula for what to charge or is it whatever you can get? I've heard of using anywhere from one year's gross to 50% of one year…………..to nothing.

    I know there is no guarantee the customers will stay but I would think that current customers are worth something.

    Thank you
  2. Clark Griswold

    Clark Griswold LawnSite Senior Member
    Messages: 554

    Another LCO bites the dust?

    I mostly hear it's one or two weeks mowing cost, not much!
  3. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    Need more information. Number of accounts. Gross sales.
  4. johnsonslawnmanagement

    johnsonslawnmanagement LawnSite Senior Member
    Messages: 908

    If you don't have contract accounts then you will more than likely not get much for them. If they were contracts, you should expect to get anywhere from 2-4 months contract rate for the account, assuming they sign for a year with the new guy. The equipment would be a toss up and depend on the purchasers needs. I bought 2 companies in the past 3 years. Bought 12 accounts for 2 months contracts and bought 3 for 6 month payments ( very very nice accounts and 3 year contracts.) I did not purchase any mowers, but did take all their handheld equipment.
    hope this helps
    Posted via Mobile Device
  5. lukemelo216

    lukemelo216 LawnSite Bronze Member
    from ...
    Messages: 1,267

    I am in the process of purchasing another company out right now. None of the accounts have a contract in place except for 1. There are about 45 accounts. There is no wrong way or right way to purchase or sell a business. Usually the price comes out to be around 20-30% of the gross revenue over a set amount of time.

    For my adventure Im doing 1 year at 25%. But im not just giving them cash. Up front im putting down 1000, with an 80% rentention rate on these accounts im expecting to do about 40 accounts and hopefully around 60,000 out of the accounts gross revenue. What I am doing is going to give him 1k initiallaly, then for 6 months pay him 3.5% of the revenue, which totals to be 21%. that totals up to $13600, my final payment would be $1400, and he will have earned 25%.

    This way works out in favor for both parties. If you dont make money, then your not out a bunch of money on purchasing accoutns, and as a seller, youre bringing in extra cash the more he sells. So if he does 75K you get about 19k for the lot.

    I think this way is the only way you can do this properly when there are no contracts in place though.

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