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  • Buy A Plumbing Company?

    I've got a chance to buy a 25 year old, semi-local repair company that does about 800k a year for 500k.

    500k includes his phone numbers (commercial/residential repair customers), 5 trucks and 4 employees. No property or shop (home based), very little in equipment and no inventory.

    The owner/founder is 70-ish.

    What are his phone numbers worth?
    (The Low Spark of Steel-Toed Boys)

  • #2
    Re: Buy A Plumbing Company?

    Phone numbers are easy to find. Names and address is what you want. Are you getting those too? How many customers? Are you keeping the company name?

    $500K is too much IMO for a some trucks and a few pages of numbers

    Comment


    • #3
      Re: Buy A Plumbing Company?

      if it looks like you can maintain that 800k a year, and that leaves enough profit to pay the staff, the debt from buying it, and yourself, it could be worth it, especially if you'll be combining all that to your own existing customer base.
      No, it's not rocket science, it's plumbing and unlike rocket science it requires a license.

      Comment


      • #4
        Re: Buy A Plumbing Company?

        here's my take. you're getting 5 beat trucks and 4 employees. plus a list of customers that might or might not pan out. no inventory and no shop.

        you could buy 5 brand new trucks and outfit them with the whole 9 yards for a lot less than 500k. you could easily get 4 qualified plumbers to fill the spots. all you need is the phone to ring.

        seems like a lot of money for 5 beat trucks and some phone numbers.

        spend the money on a good shop to rent or buy and outfit the trucks as you want them.

        but then again you could buy my 2500' shop in the prime area of l.a. / beverly hills, santa monica. get 2 stocked trucks, more tools and material than any hardware store and a list of well over 1500 customers.

        a cool 2mil will get you rolling.

        will i retire

        not yet. just getting closer to living the good life

        rick.
        phoebe it is

        Comment


        • #5
          Re: Buy A Plumbing Company?

          I heard a story of a well known local New Orleans company that sold their business to a national company for $3,000,000.

          The national company joined their name with the local companies name and proceeded to run the business into the ground over the course of three years.

          The national company then resold the business back to the original owners for $500,000.

          Not a bad deal. Get $3 million, take three years off, then get the business back for $500,000.

          I agree with Rick.

          If that business goes under their will be a bunch of people looking for a new plumber.

          If I had $500,000 to invest it would be to expand and promote my existing company.

          Lenny

          Pronounced A-Bear Drain Care

          I know, it doesn't make sense.


          http://www.hebertdraincare.com

          Comment


          • #6
            Re: Buy A Plumbing Company?

            What was the gross profit? A successful service plumber told me his rule of thumb for buying up competing shops was 5 or 6 times the gross profit. However, was it expanding or shrinking? If it was a dying business, it wasn't worth a dime.

            Comment


            • #7
              Re: Buy A Plumbing Company?

              phone numbers and customer lists are not worth anything.

              You know what is worth money, yearly service contracts!!

              I am currently working on a program to sell service contracts to all my customers, this way every 4, 6, 12 months I can have repeat scheduled business.

              a company with service contracts shows an established company.
              sigpic

              Robert

              Comment


              • #8
                Re: Buy A Plumbing Company?

                Originally posted by westcoastplumber View Post
                phone numbers and customer lists are not worth anything.

                You know what is worth money, yearly service contracts!!

                I am currently working on a program to sell service contracts to all my customers, this way every 4, 6, 12 months I can have repeat scheduled business.

                a company with service contracts shows an established company.
                I hope you are kidding.
                You can lose with me, but you can't win without me!.... PPI

                Comment


                • #9
                  Re: Buy A Plumbing Company?

                  Originally posted by Drip Trip View Post
                  I've got a chance to buy a 25 year old, semi-local repair company that does about 800k a year for 500k.

                  500k includes his phone numbers (commercial/residential repair customers), 5 trucks and 4 employees. No property or shop (home based), very little in equipment and no inventory.

                  The owner/founder is 70-ish.

                  What are his phone numbers worth?
                  Start your own. I opened with $5,000 to spend and have not taken any loans.. I have done over $100,000 in 8 months if you have any idea what you are doing you can get new customers just have to work a little harder then others.
                  You can lose with me, but you can't win without me!.... PPI

                  Comment


                  • #10
                    Re: Buy A Plumbing Company?

                    Originally posted by PlumbingParamedics View Post
                    I hope you are kidding.


                    Why would I be kidding?



                    How long have you been in the repair business? It's common sense....
                    sigpic

                    Robert

                    Comment


                    • #11
                      Re: Buy A Plumbing Company?

                      Originally posted by westcoastplumber View Post
                      Why would I be kidding?



                      How long have you been in the repair business? It's common sense....
                      Did you like my website?.... Why is how many years always the question. I have been doing plumbing for 13 years and know more then guys doing it for 50 and less then guys that have been doing for 5. I did service contracts before I went on my own, and it is just a waste for plumbing maybe A/C but we spent alot on a campain for it and it did not work, if you gonna do contracts might as well open a Service America. That said yull probally make a killing of it who knows.
                      Last edited by PlumbingParamedics; 06-13-2009, 05:53 PM.
                      You can lose with me, but you can't win without me!.... PPI

                      Comment


                      • #12
                        Re: Buy A Plumbing Company?

                        Based on all the great replies, here's what my offer will be next Friday:

                        $210,000.00 payable in 24 installments. This is based on the first 4 months of '09s net profit extended out 12 months times 2. In other words, he should have 110k in net profit this year and I'll double it.

                        Factors:

                        The "boom years" can't count as income because they were freakish. So far this year, he's doing a pre-boom business.

                        He has no property, no inventory, no equipment, and 6 year old vans.

                        Competition like me has amped up our marketing 200% to force the fence-sitting, almost-retired plumbers out. If he doesn't sell, he's going to lose market share because he isn't keeping up with the market.

                        If he closes his shop, the customers will have to go somewhere like here.

                        If he sells to his 10 year foreman....well, we've all seen what happens then. I've never seen a happy employee become a successful owner. I doubt any bank will lend 500k for this mom/pop shop, anyway.

                        What sez youse?
                        Last edited by Drip Trip; 06-14-2009, 07:46 PM. Reason: he has no equipment to speak of....
                        (The Low Spark of Steel-Toed Boys)

                        Comment


                        • #13
                          Re: Buy A Plumbing Company?

                          he'll have to be very desperate to go from 500k to 210k.

                          i doubt he's ready to take a beating down and will just hold out for a closer offer. too much blood sweat and tears to drop it that much to a non employee on those terms.

                          but who knows. remember that 5- 6 year old vans are not the cost if the business. it's the potential the business has with his current contacts and work force.

                          you also need a transition period that will allow you to step into his operation and see how he operates his business. you might continue his ways or go your own way and keep the good and dump the bad.

                          i don't think you can just jump in without his help to get you off the ground unless you're coming from a up and running business that can absorb the smaller operation.

                          still think 210k is an offer he's not going to want to discuss.

                          rick.
                          phoebe it is

                          Comment


                          • #14
                            Re: Buy A Plumbing Company?

                            Originally posted by Drip Trip View Post
                            I've got a chance to buy a 25 year old, semi-local repair company that does about 800k a year for 500k.

                            500k includes his phone numbers (commercial/residential repair customers), 5 trucks and 4 employees. No property or shop (home based), very little in equipment and no inventory.

                            The owner/founder is 70-ish.

                            What are his phone numbers worth?
                            Makings some assumptions:

                            10% net profit on 800K

                            borrowing 80% at 6.25% for 10 yrs

                            at 500K selling price: monthly payment of $4491.20, totaling $53,892.00 per year.

                            take that out of the 10% on 800K. Doesn't leave much left over.

                            A little more to it than that, but find a online loan calculator and play with the numbers and see what you think.

                            If he was to auction off the assets, (trucks, tools, inventory, etc) you can figure roughly $.30 on the dollar +/-. He would disagree with that number for sure (I wouldn't like it either). Maybe $.50 is more realistic, IDK.



                            My opinion and my opinion only: 500K is WAY too much. 210,000 might be too high also, IDK.

                            I don't think a customer list is worth much.

                            I'm sure some will disagree, but that's my story.


                            Good luck!
                            Last edited by lmpg; 06-15-2009, 04:59 PM.

                            Comment


                            • #15
                              Re: Buy A Plumbing Company?

                              naaaaaah. I'm going to offer 3 cows and a bale of hay, delivered.

                              Property and equipment is the best collateral and would prove that its a thriving business. It well may be thriving, but not in a sellable type form, that's for sure. Can you imagine taking this offer to a bank? The loan officer would laugh his little banker's butt off.

                              Maybe 2 cows and a dumb cat and that's final.
                              (The Low Spark of Steel-Toed Boys)

                              Comment

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