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Posted:  12 Apr 2012 05:11  
I have been in the business for 20 years. I have an opportunity to buy a small interiors cape business from a competitor. His gross monthly is 4k. He has no employees. It fits perfectly into my work zone. I have the man power to fold this in. What is the going rate for these types of buys. Its all contracts no real property. Clients own everything. To me it feels risky. Just changing a tech stirs up a mess, but taking over a company, that puts the new clients on pins. They hired him not me. I have seen a lot of companies take big losses on these types of deals. Any suggestions from someone who actually bought out a company and what was the fall out. Percentage of cost to contract.
Posted:  12 Apr 2012 12:32  
I would say the rate is somewhere between 4 to 10 times the monthly recurring. You should have an agreement regarding clients that drop within 6 to 12 months for other reasons than non performance on your part.
The current vendor should introduce you to the client with first a letter announcing his intention to sell to you and then a visit by both you and him.
Clients need to be reassured that your company will provide same service, same frequency, same rate. I would prepare a package introducing your company with photos, references and letters of recommendations.
Once you take over make sure you introduce the new tech yourself and then visit the clients regularly. Bring them a small orchid or some kind of a gift. Have your supervisor do additional quality control, refresh the moss or replace a couple of plants just to show you are taking good care of them. Do not introduce any changes of any kind before you have build a relationship with your new clients. The first 3 months are the most critical.
Keep in mind that most companies don't want to go thru the hassle of taking bids and changing service so if you come across as a good fit more than likely they will stay with you.
Posted:  12 Apr 2012 14:55  
That about sums it up...last I heard, 3-6 months recurring was about right, but be sure these are all at least annual contracts and not month-to-month (yes, I know, for practical purposes, all contracts are month-to-month unless they are leases, but you need at least SOME security to take on the risk).

We purchased a number of accounts years ago from a small interiorscape company whose owner was moving out of the area.  The two techs were not the greatest employees in the world, and the majority of the residential accounts ended up cancelling within a year or two (they were all friends of the former owner as it turned out), but we were able to hold on to the commercial accounts, some of which are still with us today.  I'd say it was more trouble than it was worth, all in all.  I'd prefer to prospect for my own new accounts and have the confidence of a relationship that was built from scratch myself.

Clem
Posted:  13 Apr 2012 00:16  
Thanks I will put this in my train of thought. I will say all the clients are commercial. From 4-12 years according to the seller. Now when you get into the 4-10 times the rate per account, that’s based on the way it looks and the monthly. I think some of this stuff is well below market value. For example 1 account will have 20+ plants all over the board on sizes and they will be paying more then a big company with close to 65-70 plants all over the board on sizes. To me it’s a general lack of consistency. You don’t want to lower the little one to protect it from bids but you cant raise the big one because it gets into a all or nothing category. I know you both know what I mean. My gut is ride these for 3 years triple the outlay and start picking and choosing the accounts to raise and see what the fall out is. The accounts are in good shape for the most part.  Now what do you do with the clients who are behind. He has about 15% of the list more then 45 days past due. Who collects. We sure as hell aren’t waiting 45 days for the client to finish paying him then get to me. Should these clients even count. Or should they be removed form the sale as not viable clients.
Posted:  13 Apr 2012 04:12  
You have to look at the big picture to come up with a base price. Then you use the details to negotiate. Client that don't pay on time, client that are not being charged enough, clients that need to get lots of plant replaced, clients that are out of the way...
If you buy for example on the first of May anything before that is his problem. He will have to collect the past due invoices himself. You are responsible from the date you send your first invoice to them.
We have bought several clienteles and we will continue doing it if the opportunity is there.
The bottom line is you have to look at how long it would take and how much money you would have to spend to accumulate the business you are buying.
If it costs too much to buy it, just hire a sales person or start advertizing. You may get the same result faster and cheaper.
Posted:  13 Apr 2012 15:13  
The delinquent balances will have to be the current owner's problem...BUT...they are obviously red-flag-accounts and should NOT be purchased at fair market value, if at all.  If you want to take a risk with them at a deeply discounted purchase price, that's your call.  But a habitual slow-payer billing at $300.00 a month is not worth the normal purchase price of, say, $1,200.00...maybe half that, or pass on it altogether.

Clem
Posted:  14 Apr 2012 05:14  
Thanks You.
Posted:  21 May 2012 12:24  
Hello Every One !!!
We purchased a number of accounts years ago from a small interiors-cape company whose owner was moving out of the area. Bring them a small orchid or some kind of a gift. Have your supervisor do additional quality control, refresh the moss or replace a couple of plants just to show you are taking good care of them.
Posted:  26 May 2012 15:28  
Hmmm, Watson...what's up with that link?  My deductive powers tell me it may be that you're trying to spam us...

Holmes

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