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Posted:  17 Jul 2012 04:02  
Hello,
I have an opportunity to buy a small business with approx 10 accounts a couple are residential and the rest are ofices. Just wondering in this economy what a good price might be.  I've heard that one years gross is about right.  Is that correct?  Also what safeguards could I use like putting a third in escrow as to ensure that I keep the contracts after the sale for one years time. 
Should all contract be turned over or resigned?

Looking for everyone input.  Thank you very much.  I appreciate your time.
nnpoland
Posted:  18 Jul 2012 01:31  
Three to six months, max, recurring income only.

Escrow a good idea.

If current contracts contain provisions for transfer with sale, that should be okay; otherwise, new contracts are necessary.  Consult your attorney about what's applicable in your state, as sometimes homemade contracts don't stand up to legal scrutiny.

Clem
Posted:  19 Jul 2012 01:59  
Thank You!
If you or anyone else has a few tips that is great.
I appreciate it.
nnpoland
Posted:  19 Jul 2012 04:36  
Try to ascertain the nature of the contracts' origin...by that I mean do they stem mostly from personal connections between the seller and the client principals and are therefore subject to cancellation once that relationship is severed, or are they "strictly business" contracts with no such personal entanglements involved?

Will you be hiring on the tech(s) currently servicing the accounts?  Or are they all owner-serviced?  Keeping on a beloved tech can help in account retention after the sale and give your new clients a comfort zone in getting to know you and your company.  Unless the current tech is just not acceptable to you for some important reason, this should be a top priority, at least for the first six months or so after the sale closes.

I know it's tough to arrange, but try to get a sense of each client's state of mind and feelings about the quality of service they're receiving before you buy...some may be ready to cancel for cause or other reasons, and even if you're protected by an escrow/refund arrangement with the seller, you must feel that each of these accounts would be worth keeping long-term or you wouldn't be interested in buying them, so it's in your best interests to try to gauge the prospects of keeping each of the accounts.

Good luck, and let us know how you do with the transaction!

Clem
Posted:  23 Jul 2012 22:22  
Clem,
This is great advice.
Marcée

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