What will you pay for another businesses accounts?

Discussion in 'Lawn Mowing' started by colawn, Dec 7, 2006.

  1. colawn

    colawn LawnSite Member
    from co
    Messages: 141

    I am trying to determine what market value of accounts are. What percentage of gross are you willing to pay in the off season for next seasons accounts. You would be taking over a complete maintenance business. Does it differ for you between commercial and residential and if so what percentages? What about contracted or not? I am pretty sure I know the answers to some of these questions so don't just bash the thread for being "stupid" questions. I am trying to get a survey of responses so that we all have a better idea of what or businesses are worth and what they should be sold for.
  2. BQLC

    BQLC LawnSite Senior Member
    Messages: 574

    Do a search on this it has been discussed on here quite a bit
  3. superbee

    superbee LawnSite Member
    Messages: 79

    Personally, I wouldn't pay anything. There is no guarantee that you will keep these accounts after the deal is done because you don't really "own" anything. I have found it easier to just go and put out flyers before the start of the season and maybe do some local advertising. Flyers are cheap. When you start getting some accounts and do a good job, you most likely will get referrals. Build your business on what you have accomplished, not what someone else has done. If equipment is involved, that's a different matter. If you want the equipment, make what you think is a reasonable offer for used stuff.
  4. grant087

    grant087 LawnSite Member
    Messages: 184

    it all depends on a few factors time of year, how accounts are priced, complete company or just accounts, equiptment or no equiptment, a couple other factors, but most importantly what you think there worth....i dont think you could just give out a number online theres way to many variables i would say for just the accounts 1-4 weeks revenue for them but then again u gotta factor in those variables....
  5. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Messages: 2,524

    I had someone discuss this recently with me and it got me to thinking. This individual was talking with a guy over selling him his equipment (not much) and accounts.

    For me, if someone sold me their accounts, I'd probably go this way:

    Each account would be reviewed by the LCO and myself. The residential ones I'd be interested in we would meet with the homeowner and if agreed, they'd sign a one-year contract with me. This would pay the LCO possibly one month revenue from that account.
    The commercial accounts would either do the same or if they won't resign a contract right away, I'd still take over the account and if they resigned at the contract's end, approximately one month's revenue to that LCO, also.

    Sound good? Any "what if's" I haven't thought of?
  6. colawn

    colawn LawnSite Member
    from co
    Messages: 141

    I personally think it can be a good way to grow if you do it right. I like the idea of paying a % of sales at the end of the year to the LCO you have bought out. If people really won't spend more than 10-30% of gross on a account you can pick up some good business and make money on it your first year. You just have to make sure then sale is tied somehow to how much you make with new customers. As an industry we sell our business for much less than most other industries. This is great for buyers in my opinion. I want to just figure out what everyone as an industry whole thinks is a fair value for a business. I know everyone's business is different but there has to be some place where everyone feels there is value. Where is that for you?
  7. Drew Gemma

    Drew Gemma LawnSite Bronze Member
    Messages: 1,508

    Research post by me and you will find some good info

    basically get a contract
    non -compete
    pay 50% first 2 months
    only on the ones that pay you and stay with you.

    The best thing you can do when buying a business is always keep the individual you are buying it from involved after the fact it only benefits you!
  8. Josh.S

    Josh.S LawnSite Bronze Member
    Messages: 1,085

    Since I am looking to expand, I would pay somewhere in the area of 1 months gross if the company signed a non-compete agreement, and I got to talk to all of the residential customers and make sure that they agreed to go with me for the following year (most customers are ok by an oral agreement), and I would have the commercial customers sign a service agreement before I gave him any money...

    I would really like to expand, hopefully next summer I can find someone to buy out again..
  9. richard1103

    richard1103 LawnSite Member
    Messages: 120

    years a go a man tryed to sell out to me i asked what do i need his worn out
    equipment in the next 6 months i picked up 30 % custmers and about 20%
    the next yeara ftet he sold his equipment and work
  10. Lawnworks

    Lawnworks LawnSite Fanatic
    from usa
    Messages: 5,407

    I have bought out a business before. I think there are many variables. High end accounts or mow and gos? Year round service?

    It is probably the easiest way to expand. People that say "oh just go pass out flyers" may be missing out. Will you not be able to advertise after you have bought out another company? I would strongly recommend making some kind of offer. If the guy is in a hard situation, it might make your day. Next time I buy out some mow-and-gos I will offer 7-10% of gross. Of course if they are high end monthly contracts it might be more.

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