Last edited by PlumbingParamedics; 06-13-2009 at 05:53 PM.
You can lose with me, but you can't win without me!.... PPI
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.
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 at 07:46 PM. Reason: he has no equipment to speak of....
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.
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.
Last edited by lmpg; 06-15-2009 at 04:59 PM.
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.
Just a couple of quick questions. Does the owner of the company have his/her name as the company name? Will you be changing the company name? How many of these phone numbers are numbers of the owner’s family and friends? How will the customers react to the new ownership?
Since there are no assets (those trucks barley qualify as assets) and the only value of this company seems to be the phone numbers, it sounds like you need to know more about the owner’s relationship with the customers.
Local services are all about relationships and I would bet that half of those phone numbers will be useless because of the change of ownership.
I offered 1,500.00 for the phone numbers. He turned it down and I'm fine with it.
There are some companies around here that I would go to any lengths to acquire, but this ain't one of them and the others aren't for sale.