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Interiorscape Forum / Scaper Talk Discussion Forum / General Scaper Talk / Formula for buying an existing business

Posted:  01 Jun 2011 00:36  
Hello all,
What is the formula for buying an existing plant business. I remember hearing a few things in the past but cannot find them in the archives. Any input is welcomed!

Thank you,

Jennifer
Posted:  01 Jun 2011 01:10  
I just found an old post that says 3-6 months recurring income. If anyone else has any input it is appreciated!
Posted:  01 Jun 2011 03:22  
check this thread out: http://interiorplantscaper.com/greenchat/inde ...
Posted:  01 Jun 2011 04:37  
Thank you Alex! Nice!
Posted:  01 Jun 2011 15:09  
There is really no set formula, although the ballpark range of 3-6 months' recurring revenue for purchase of accounts only is a common one that's kicked around for years.  But it depends.  Contracts generally have 30-day outs, which makes them worth, well, 30 days' revenue technically, because the buyer has no way of knowing how long that contract will stay with the new owner.  So most account purchase agreements will include some sort of framework to allow for monetary rebates for cancellations within a certain time limit.

Be careful about buying the business itself, though.  Even with due diligence on your part as the potential buyer, you could get bitten by unforeseen occurrences for which you could be liable...money judgments from suppliers or other creditors, personal injury lawsuits, employee claims for back wages, etc...if you buy the company instead of just the accounts. 

Clem
Posted:  01 Jun 2011 22:55  
Good information! I would only be buying the accounts so no worries on the unforseen stuff. Thank you!!

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