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Appraising Existing Company

Aug 29, 2018
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Chris Westerman
Hey all we are taking over the company I've been a tech with for the last 5 years! Really excited to get into the driver seat but I'm wondering how do you value the current company? Are there brokers that are skilled in this industry that you would recommend? Is there a set depreciation for the tms and equipment? Any feedback would be appreciated!
 

Spazznout

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Feb 13, 2011
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Tell us more about the company you are planning to buy.
How long has it been in business
How many Trucks
How old are the trucks
How many employees
How many sub contractors
How many account based customers
how many non account based customers serviced last year
What is the job average for last year
Who does the marketing...previous owner or outside company
What debts will you be assuming
What is the online reputation of the company
What are the lease terms on the shop where the vans park
Can you take over the lease

There is a lot to consider when trying to value a CC business.
Its going to be worth a lot less than the current owner thinks.....it always is. Just a warning.
 

MikeGaure

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Nov 23, 2015
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Tell us more about the company you are planning to buy.
How long has it been in business
How many Trucks
How old are the trucks
How many employees
How many sub contractors
How many account based customers
how many non account based customers serviced last year
What is the job average for last year
Who does the marketing...previous owner or outside company
What debts will you be assuming
What is the online reputation of the company
What are the lease terms on the shop where the vans park
Can you take over the lease

There is a lot to consider when trying to value a CC business.
Its going to be worth a lot less than the current owner thinks.....it always is. Just a warning.
Definitely have to look at are you buying a business or a job? If there isn’t enough revenue to hire manager and tech then your just buying a job and the cost of purchase will be much lower
 
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OxiFreshGuy

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Personally I dont know much about it, but I do know it's the name and market recognition is really the only thing of value.
 

MikeGaure

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Nov 23, 2015
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Personally I dont know much about it, but I do know it's the name and market recognition is really the only thing of value.
Yes and no. Usually it’s the assets, equipment and if they have a brick and mortar. There’s no guarantee customers will stay.

Cuz you can advertise and bring numbers in. It’s all a numbers game. Without said business operating there’s that much more clients looking for a new cleaner.
 
Aug 29, 2018
49
20
8
Real Name
Chris Westerman
Tell us more about the company you are planning to buy.
How long has it been in business
How many Trucks
How old are the trucks
How many employees
How many sub contractors
How many account based customers
how many non account based customers serviced last year
What is the job average for last year
Who does the marketing...previous owner or outside company
What debts will you be assuming
What is the online reputation of the company
What are the lease terms on the shop where the vans park
Can you take over the lease

There is a lot to consider when trying to value a CC business.
Its going to be worth a lot less than the current owner thinks.....it always is. Just a warning.
Original company started in 1995 changed hands twice since then, always kept the same name and has been family owned and operated. The name has good reputation. 2 trucks 2005, 2006 chief 1 and chief 2. Air duct trailer 12 dri eaz air movers 4 dhs 175, cimex, RX 20, 2 cx 15s. Company is paid off we would lease a separate garage space (current is there garage) customer database is lengthy from 25 yrs of service but recently we've had to cut back because of limited employee help. Myself included (I'm a stay at home dad part time). If say we're running at 50% of what it could and should be, or at least used to be. The first year the current owners had it they grossed 350000, last year I think it was 150000. She's asking 120000.
 

MikeGaure

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Nov 23, 2015
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Mike
Original company started in 1995 changed hands twice since then, always kept the same name and has been family owned and operated. The name has good reputation. 2 trucks 2005, 2006 chief 1 and chief 2. Air duct trailer 12 dri eaz air movers 4 dhs 175, cimex, RX 20, 2 cx 15s. Company is paid off we would lease a separate garage space (current is there garage) customer database is lengthy from 25 yrs of service but recently we've had to cut back because of limited employee help. Myself included (I'm a stay at home dad part time). If say we're running at 50% of what it could and should be, or at least used to be. The first year the current owners had it they grossed 350000, last year I think it was 150000. She's asking 120000.
That’s a really big drop in revenue. Who in their right mind allows that much revenue to drop instead of just hiring competent employees
 

MikeGaure

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So are you only going to be committed to it part time?
 
Aug 29, 2018
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Chris Westerman
No
So are you only going to be committed to it part time?
I'm going full-time as well as the the other tech who just got started. We're hoping to get back to both vans out regularly with winter being the exception.
 

Spazznout

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Original company started in 1995 changed hands twice since then, always kept the same name and has been family owned and operated. The name has good reputation. 2 trucks 2005, 2006 chief 1 and chief 2. Air duct trailer 12 dri eaz air movers 4 dhs 175, cimex, RX 20, 2 cx 15s. Company is paid off we would lease a separate garage space (current is there garage) customer database is lengthy from 25 yrs of service but recently we've had to cut back because of limited employee help. Myself included (I'm a stay at home dad part time). If say we're running at 50% of what it could and should be, or at least used to be. The first year the current owners had it they grossed 350000, last year I think it was 150000. She's asking 120000.
Oh wow,

Sorry man, that is waaaay tooo high

All of the vans and equipment are done. Very old. Worth very little.
You will be replacing all equipment within the next year. So make sure you budget for new vans and TMs

Honestly, the customer database is worth 2 grand, maybe if that.....

Id say its worth around 20-25 K for everything.....MAX
 
Aug 29, 2018
49
20
8
Real Name
Chris Westerman
Oh wow,

Sorry man, that is waaaay tooo high

All of the vans and equipment are done. Very old. Worth very little.
You will be replacing all equipment within the next year. So make sure you budget for new vans and TMs

Honestly, the customer database is worth 2 grand, maybe if that.....

Id say its worth around 20-25 K for everything.....MAX
I really value your opinion, have you bought and sold cc business before? Are there actual companies that we could hire? No offense but of I come to her with "some guy on tmf told me so" she's probably gonna laugh. I'd like a professional appraisal
 

MikeGaure

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You’ll have to find a broker in your area. I recently bought a window cleaning company it was the same thing. More or less paid for the equipment and a little on top. Wasn’t worth what the original owner thought it was worth.

Think about it. 120k can buy a lot of equipment and marketing. If they don’t sell those “customers” are going to go somewhere anyway. Get yourself in front of them by marketing to them. I wouldn’t dream of paying them that. Plus unless you have that kind of cash you better have a good business plan and their books better be impeccable before any bank will write you a check.

It’s still very disconcerting that the business has lost well over $200k in business

I really value your opinion, have you bought and sold cc business before? Are there actual companies that we could hire? No offense but of I come to her with "some guy on tmf told me so" she's probably gonna laugh. I'd like a professional appraisal
 
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Agree that 120k being way too much, different story if it went from $150k to $350k but it's declining. Without seeing equipment, the books and customer data base to know how many repeat customers they have from last 3 years I'd say $35k tops but could be much less depending on condition of equipment as I believe that is where most of the value will come from.
 
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Kevin Dumas

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Forget about the 25 year list. What matters as was said above is the last 3 years if that.
And putting top dollar on equipment at 30k and 15k for the list would probably be stretching the current value.
 

OxiFreshGuy

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Yeah man, I started my own company late this year and after spending $40,000 on equipment and financing the rest I didnt have much left over.

If I had another $80,000 in marketing cash available I'd rather start a new company than buy an existing one.

Carpet cleaning is all about referrals.
 

Spazznout

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I really value your opinion, have you bought and sold cc business before? Are there actual companies that we could hire? No offense but of I come to her with "some guy on tmf told me so" she's probably gonna laugh. I'd like a professional appraisal
I agree....

The issue your gonna run into is the broker wants a fee.
Its gonna be hard to justify spending a few grand with a broker if when the whole deal is worth less than 25K.

I have worked for 2 companies before starting my own bizz. One sold for a bit under a million the other never sold as they had no regular signed accounts and depended on print marketing with no brand or brand recognition. His vehicles were all past there prime with little to no value. He was stubborn and waited for his asking price. Until a year had passed and the equipments value had dropped even further and his list of previous customers was now a year stale. His business never sold as it had no value.

If you have 135K sitting around I would recommend you go buy a brand new van and Truck mount..........then go hire a pros marketing firm to do your brand, website and then help you develop and execute an online and real world marketing strategy.

You can do a lot for 125K.

Good luck
Take your time
don't rush, you want to get this right
if you get it wrong you may blow your chance
 
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PistolPete

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I agree with the above posts.
You're not buying a business, you're just buying your job.
If it was better equipment and sales were increasing then yes it's worth more.
As it stands it's probably actually worth $20k for equipment plus whatever good faith money you want to give them for the client list.
 

Spazznout

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Oh I just noticed you said the previous owner was running the bizz out of his house.....

Sorry.....another big red flag........

$20K tops for everything including list and owner helps you with business end of things for a few months so you can untangle whatever messes he is leaving you.......
 
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PistolPete

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This might be helpful...
You would need to know the PROFITS not sales total for last year, then multiply that by probably 1-3.
 
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Spazznout

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This might be helpful...
You would need to know the PROFITS not sales total for last year, then multiply that by probably 1-3.
no way would I or a broker use that formula on a business showing YOY declining sales.....

It does NOT accurately project future profits as first you have to arrest the decline in sales before then figuring out how to make the company at least stable or growing again.......

Otherwise the company has a negative net value besides the equipment as it stands. Its a failing on its deathbed company on paper with the declining sales the OP disclosed.
 
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