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  • What do you think?

    Today an owner of another local plumbing company called. his dad started the company over 40 years ago and now he (his dad)is getting ready to retire. They have given me a decent amount of business in the past when they could not get to it. His dilema is he is a full time fireman he only works part time as a plumber and his dad is the one who does most of the actual plumbing work. he told me today he doesnt want to just throw away what his dad has built and he doesnt think he could afford the loss in income. He said he has been impressed with the way i handle myself with customers and he wants to meet on monday to see if we can make some sort of arrangement. I dont know yet what he wants or how his business is ran i do know that they do not advertise and they seem to stay very busy. So my questions are. what type of arrangement would you guys look for? and what types of red flags should i be looking for? I will be doing this legally with lawyers if i do go forward with it. thanks
    Mike
    Clark County Plumbing And Drain
    www.plumbinginclarkcounty.com

  • #2
    Re: What do you think?

    Don't know man. Just see what he has to say. I think you'll know a red flag when you see or hear it. Plus you won't take any action until you discuss it with your attorneys. Doesn't hurt to have a sit down. Might be something you want to pursue.

    Assume nothing-good or bad to come out of the meeting. And nothing is real unless it is in writing.

    J.C.
    Last edited by BobsPlumbing; 07-15-2009, 09:44 PM.

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    • #3
      Re: What do you think?

      offer him nothing up front and give hime 10% of all the jobs that come in from him.

      he gets 10% of the gross and you basically get his customers. maybe 10% for the first couple years and tapers to 5% in years 3-5.

      sounds good to me

      rick.
      phoebe it is

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      • #4
        Re: What do you think?

        This sounds like a great opportunity! However, the dad might want some kind of cash buyout, this might be his retirement plan! I was told that a fair price for a plumbing shop is 6 times the average yearly profit, or 1 year's gross revenue.

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        • #5
          Re: What do you think?

          Originally posted by Bogart View Post
          This sounds like a great opportunity! However, the dad might want some kind of cash buyout, this might be his retirement plan! I was told that a fair price for a plumbing shop is 6 times the average yearly profit, or 1 year's gross revenue.
          But that would only apply if you were in the market and looking for a Plumbing Shop to purchase. They approached you. They might be giving you the first chance at the shop, but they did come to you. I would think that it would be a bonus and a great opportunity for you, If that's the direction that you want to go. I would wait until thew meeting to see what cards they want to show before even start to count any chickens.....

          Good luck at the meeting!

          Mick

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          • #6
            Re: What do you think?

            I had the same thing happen a few years ago. He wanted too much money and after thinking about it I decided no. The business shut down and I got most of his customers anyway for nothing.

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            • #7
              Re: What do you think?

              If the talks get past the salutation stage, ask to see their books and, if they have one, their customer database. They will tell you what you need to know.

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              • #8
                Re: What do you think?

                Originally posted by JCsPlumbing View Post
                Don't know man. Just see what he has to say. I think you'll know a red flag when you see or hear it. Plus you won't take any action until you discuss it with your attorneys. Doesn't hurt to have a sit down. Might be something you want to pursue.

                Assume nothing-good or bad to come out of the meeting. And nothing is real unless it is in writing.

                J.C.

                I agree with J.C. I would just hear him out and see what he has to say. One thing I have started to do over the past few years is think about big decisions for at least 24 hrs and talk with people that have gone through those experiences and some professionals. Don't agree to anything until all has been revealed and if they won't show you what you need to know then walk away even if it sounds really good. When all is said and done have a professional contract written. Unfortunately a mans hand shake doesn't mean jack in business anymore.

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                • #9
                  Re: What do you think?

                  it doesn't cost anything to listen.you will know what to do.

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                  • #10
                    books

                    have your CPA go through the books. have you ATTORNEY go through the contract. when junior quits saving foundations is he going to want the co back? are dad and junior going to "help" you run your company? think like ranger. if to rich, walk. you are buying a phone number and customer list.i know you will get tools and stuff, but you can buy them any time you want........... hows junior going to take to having you as his boss? i'm not being an ******* here, but they called you. it should be a very good deal for YOU. rick is right. no money up front, pay off should all come from gross.......... write down all of your questions as you go. you will forget some if you don't. you should have satisfactory answers for all............at first meeting, i would probably try to figure out what kind of deal dad and junior want. some idea on money................do you need or want it? that is the real question. are you happy and comfortable? is this going to add to that? take your time..................food for thought..............if i could hazard a guess, it's that they will be real proud of what they have.......... breid

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                    • #11
                      Re: What do you think?

                      If it were me, I wouldn't want it unless I had 100% control over the business decisions. I wouldn't take a partner. It's pretty rare when partnerships work.
                      www.ClinkscalesSeptic.com

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