Selling the business

[Muhalli]

Some of you gave advice to camperboy about buying his friends business. My father is also in such a business and wants to get out. But, how much does he ask? His client base is around 100, about half are down on a weekly basis, the rest every 10-12 days. He does spraying for weeds, fertilizing, watering (when necessary). He also has all the equipment for immediate start-up. Any advice you could provide would be helpful.

[andersc1]

We're going to need more to go on. Annual gross sales, commercial accounts verses residential accounts, equipment that is included, are all accounts on contract, what type of advertising is done, etc.

Curtis

[bobkessler]

Some of you gave advice to camperboy about buying his friends business. My father is also in such a business and wants to get out. But, how much does he ask? His client base is around 100, about half are down on a weekly basis, the rest every 10-12 days. He does spraying for weeds, fertilizing, watering (when necessary). He also has all the equipment for immediate start-up. Any advice you could provide would be helpful.

Like anything a business is worth what someone is willing to pay for it. My experience is confined to Florida so keep that in mind. I bought out plenty of small mom and pop companies and it is too detailed to cover in this forum. You may consider listing your company with a broker. There you get professional help, including legal advice, for a fee of course.
I usually tried to pay about one half of the gross receipts, plus for the equipment if I wanted it. In spite of a due diligence financial audit, sellers often exagerrate their gross. I protected myself with a 125% penalty clause based on the amount of misrepresentation. Once the seller sees that he often quickly redoes the numbers. As a buyer I enforced the contract by giving him a percentage down, and then a payout over time. The one time a guy beat me was when he had collected most of his money from his customers in advance and my contract didn't protect me from that.
LESSON LEARNED!
Be honest with whomever you're dealing with and it will pay you back.
There are plenty of other considerations. I liked to divide his gross numbers by the number of employees just to get an idea on his net. It's crude but not a bad starting place. My final word is in my opinion this is a great small business, and a not so great big business. My happiest times ( and most profitable) were when I had about 5 employees.
Good luck!

[Phil Nilsson]

I have sold tons of them ... and will tell you this ... a fair way to look at it is YOUR cost of getting the accounts, plus inflation ...

What did it cost you to acquire accounts? How long have you had them? How long will the Buyer keep them?

You see it's not a simple thing ... get a broker to sell it ... let them work out the details ... the hard part is not what it's worth ... the market will tell us that ... the hard part is finding someone to buy it ... that my friend can take 100's of hours.

Phil

P.S. Don't think for one minute you're sitting on a gold mine. Grounds maint accounts are a dime a dozen ... chemicals are worth more ... I have had 100's of mowing accts to sell that wouldn't move if you put a bomb under them. It makes a big diff if it's accounts or a biz you're buying.