Questions about buying existing accounts

[Hammerslay]

Hi,

I recently landed a maintenance contract for 2004 with a local tax and financial
service. The owner of thecurrent lawn service(who was also a client of the financial service) recently passed away. The owner of the financial service is offering me a deal to purchase the existing accounts for the widow, who wants out of the business.
I don't know all the details yet, but here's what I know:
There are 13 accounts in total, 7
commercial (3 very large) and 6 residential. I pay no money up front. I pay 20% of earnings from the contracted maintenance work for three years. I don't pay on any accounts that leave or I drop somewhere down the line. I don't pay for money earned from additional services I offer outside the maintenance contracts.
I think it sounds like a good deal. The much needed extra accounts should bolster my business for next season and they are all located in close proximity to one another. I'm waiting on some numbers and details of the current contracts before I make a decision. The main thing is these accounts must be very profitable for me to giveup 20% for three years. Remember I can pick and choose the ones I'm comfortable with.
I want them to make the transition to be as smooth as possible. Face to face introductions with the clients would be nice.
What do you think? Do you think the percentage sounds a bit high? shoud I haggle down the percentage a bit? Let's say to 15% for 3 years? Or how about cutting it down to two years at 20%?
Does anyone have any experience with this type of deal?

[Phil Nilsson]

I pay 20% of earnings

"earnings" ... on net profits or are you talking gross sales. if talking gross sales ... too much.

Phil

[mattslandscapin]

I bought about 30 lawns from another landscaper and I paid two cuts worth for each lawn. So if a lawn was $10 i paid $20 for that lawn.

[Hammerslay]

Hey Phil,

I believe it's gross sales. I kinda felt this way too. But the key is no up front money. I'm still pretty new at this game and cash flow is a bit tight. And I can be selective on what accounts to do busines with thereby avoiding any under bid accounts. Although I don't have all the details yet, 3 of the commercial accounts are quite large. I guess the old man was making a decent living off these 13 (Originally 14) accounts.
I think the financial service owner is trying to work with me and make it as easy as possible. He did sign a 2004 maintenance contract almost six months in advance.
What do you think would be a good target percentage?
What should I watch out for when making a deal like this?
Have you ever made a deal like this with no up front money?