Appraising Existing Company | TruckMount Forums #1 Carpet Cleaning Forums

Appraising Existing Company

mrotto

Well-Known Member
Sep 1, 2009
1,841
1,168
113
Wisconsin
Real Name
Paul Ottensmann
Business Location
United States
The first year the current owners had it they grossed 350000, last year I think it was 150000. She's asking 120000
so based on those numbers she paid $300,000 when she bought it and the vans were newer... doubt that. Her numbers are way off.

I would suggest that she get a professional appraisal. Shes the seller so she is the one that has to verify her number.

Basically she just pulled the number out of the air.
 
  • Like
Reactions: Spazznout

Luky

Well-Known Member
Nov 29, 2013
1,812
1,041
113
60
Chicagoland
Real Name
Marian Lukacisin
Business Location
United States
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
You should listen and think again, our industry business is not a real estate, you can hire a appraiser but he would have to have available books and info to the last detail for a at least 5 last years. I'm not insinuating that books were cooked, but as any industry equipment and tools are going to depreciate, for sure you have to pay great attention to what are you buying ,when comes to a carpet cleaning business. Let me give you an example from recent weeks. I was eyeing business for sale with asking price of 60 K. Established, over 30 years old, with about 1000 heads in customer database, servicing mostly high end houses , just minutes from my current locations. Owner went down to a 20 K for customer database and Butler with about 2500 hours. After crunching numbers, I've realized that business is not worth of my time or investment for that matter. Gross revenue of the company was only 40 K lower than what you've disclosed. After careful consideration, talking to my close friends on TMF, I've decided not to proceed with a " lucrative " deal.
So, before you you have more disrespectful comments to a @Spazznout
advice, you must know that you're offending rest of the platform. If you knew how to proceed, you wouldn't ask questions, if you seek guidance, you should weigh your words first before you toss them in the open.
Just my observation.
The fact that you were asking " only " about appraiser is not an excuse.
Good luck with your future deals..
 
  • Like
Reactions: OneBlueSummer
Aug 29, 2018
49
20
8
Real Name
Chris Westerman
You should listen and think again, our industry business is not a real estate, you can hire a appraiser but he would have to have available books and info to the last detail for a at least 5 last years. I'm not insinuating that books were cooked, but as any industry equipment and tools are going to depreciate, for sure you have to pay great attention to what are you buying ,when comes to a carpet cleaning business. Let me give you an example from recent weeks. I was eyeing business for sale with asking price of 60 K. Established, over 30 years old, with about 1000 heads in customer database, servicing mostly high end houses , just minutes from my current locations. Owner went down to a 20 K for customer database and Butler with about 2500 hours. After crunching numbers, I've realized that business is not worth of my time or investment for that matter. Gross revenue of the company was only 40 K lower than what you've disclosed. After careful consideration, talking to my close friends on TMF, I've decided not to proceed with a " lucrative " deal.
So, before you you have more disrespectful comments to a @Spazznout
advice, you must know that you're offending rest of the platform. If you knew how to proceed, you wouldn't ask questions, if you seek guidance, you should weigh your words first before you toss them in the open.
Just my observation.
The fact that you were asking " only " about appraiser is not an excuse.
Good luck with your future deals..
Ahhhhhhh this is why text vs voice is so hard to communicate, I think you misread my post. I actually do really value all of your opinions especially @Spazznout so please do not take offense . I'm simply trying to find out more information on actually bringing some realistic asset values and customer database value....sorry if that came across in the wrong tone.
 
  • Like
Reactions: Luky and Select

MikeGaure

... ... ... ...
Premium VIP
Nov 23, 2015
7,498
3,907
113
Real Name
Mike
Ahhhhhhh this is why text vs voice is so hard to communicate, I think you misread my post. I actually do really value all of your opinions especially @Spazznout so please do not take offense . I'm simply trying to find out more information on actually bringing some realistic asset values and customer database value....sorry if that came across in the wrong tone.
The responses all have been real world and realistic. You’re not the first person who ever asked that question.

I personally just bought a business two years ago. After having been in business nearly 10yrs.

It was nowhere near the asking price and it was someone I knew and he had done very well. But the business just wasn’t worth it. Think in terms of the invester. If someone had $120k cash and could buy a CC business but had to run it 50-60hrs a week you think he’d be excited about that? That’s not a good investment.

So you’re buying a job that’s different and you could build a business making that without all the headaches of buying a new job
 
  • Like
Reactions: Timothyscarpet
Aug 29, 2018
49
20
8
Real Name
Chris Westerman
The responses all have been real world and realistic. You’re not the first person who ever asked that question.

I personally just bought a business two years ago. After having been in business nearly 10yrs.

It was nowhere near the asking price and it was someone I knew and he had done very well. But the business just wasn’t worth it. Think in terms of the invester. If someone had $120k cash and could buy a CC business but had to run it 50-60hrs a week you think he’d be excited about that? That’s not a good investment.

So you’re buying a job that’s different and you could build a business making that without all the headaches of buying a new job
Could someone please explain the difference between her "depreciation asset schedule" from her accountant that she's claiming 75000 and the actual value on the equipment? Thanks
 

Spazznout

Premium VIP
Feb 13, 2011
6,346
3,108
113
Ohio
Real Name
Matt
Business Location
United States
Could someone please explain the difference between her "depreciation asset schedule" from her accountant that she's claiming 75000 and the actual value on the equipment? Thanks
If you post the document, and take out any personal info would be happy to look it over for you. If it is her tax depreciation schedule on previous purchases, that would have very little bearing to what the equipment or companies market value is. You are trying to establish what the market value of the company and all of its assets are.

You asked for an explanation of the difference between 2 things and then only listed her depreciation asset schedule. What were you trying to compare that schedule up against??? I am not being an ass. Just trying to be helpful.

I honestly would not type this much but it really seems you are about to walk into your wort nightmare that may set you back 10-15 years. Just being very honest. The vans and equipment are all 19 years old. That is old man. The stuff is nearly worthless on the open market. IF your boss was to list her stuff on craigslist today, what would each item be worth. Go through and make a list of all of the assets and what they are selling for on Ebay and craigslist. Not just listed, but at what price they are actually selling at. 2 vans from 2006 are worth 4K for both on a good day. Truckmounts that are similar in age are nearly impossible to sell. Usually get more selling the blowers and motor and parts separately. Say 1K per machine. Duct cleaning trailer. That's my specialty and I can build a Duct trailer with the trailer, gas negative air machine hose, gas compressor and tools for 12K. It the trailer and duct equipment is also 15+ years old its worth 3k FOR EVERYTHING.

Let me ask you.

What do you think the business is worth????
Why?

To me this looks like a dieing business. No care was taken to update trucks and equipment. Now the owner is stairing down the need to buy 2 new van and TM to keep going. That is a 100K+ investment. They have no interest in putting 100K more into their failing business.

Dont buy someone else's problem.

Run my friend run.

If you think the customer database and name are worth it,
Offer 2K for the list and naming rights.
Then spend your other 118K on a new van, and a new brand to go with the name you purchased and a marketing firm to get you going............
 

PistolPete

Well-Known Member
Sep 28, 2014
1,845
1,142
113
Real Name
Peter Dymond
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.
So if the last years PROFIT (gross profit after all expenses) is $10k multiplied by 1 then its value is $10k
Add the worn equipment and you land in the $20-30k range which is what others have stated.
I dont think it's far off
 
  • Like
Reactions: Spazznout

Spazznout

Premium VIP
Feb 13, 2011
6,346
3,108
113
Ohio
Real Name
Matt
Business Location
United States
So if the last years PROFIT (gross profit after all expenses) is $10k multiplied by 1 then its value is $10k
Add the worn equipment and you land in the $20-30k range which is what others have stated.
I dont think it's far off
sorry, I misread, I thought you were saying gross sales.
 
  • Like
Reactions: PistolPete

Spazznout

Premium VIP
Feb 13, 2011
6,346
3,108
113
Ohio
Real Name
Matt
Business Location
United States
And even net profit is deceiving if you have YOY losses, like half your business gone losses as the Original Poster is describing. That is where using a generic 3x sales will fail.

OP said owner did 150 K in sales.
My guess the owner made about 40K taxable profit.
Then they multiplied it by 3.

Thus why they are asking 120K.

Thats all I was saying.

3x rule does not work many times when trying to establish a business valuation.
 

mrotto

Well-Known Member
Sep 1, 2009
1,841
1,168
113
Wisconsin
Real Name
Paul Ottensmann
Business Location
United States
just so you know, I got a new TM this past spring for $60,000

1 ton, extended van rhinolined
HydraMaster Titan 575 HP
Water Pond (120 fresh water tank w/elec hose reel)
Auto pumpout
Water softener
SS Chem shelf

All the information you need to get customers can be found right here.

So the question really is, when you give your two weeks notice, what is her business worth then?
 

Anderson

Well-Known Member
Aug 16, 2006
2,781
1,139
113
60
Belton Texas
when I started out 20 years ago I looked into buying a few carpet cleaning business:
They wanted anywhere from 30-75k

ended up getting my own TM
and purchasing a guys customer list for 1000$

my expericence on his customer list
1. 50% of homes left the 1st year
2. after 2-3 years only had about 5% homes left
3. Commerical - lost about 1/3 the first year
and another 1/3 the 2nd year
Kept about 1/3 of commercial accounts.

in summary commercial will stay if you work it right....
unless you know the homeowners personally or unless you are in a small town....
you will lose most of your homes.....

Most Janitorial has signed contracts....
Unless you have signed contracts they have no obligation to stay with you......
 
  • Like
Reactions: Luky

Kevin Dumas

Well-Known Member
Aug 31, 2008
3,200
779
113
Binghamton, NY
Real Name
Kevin Dumas
About the only way there may be increased value in buying a cleaning business is if you were the tech that cleaned the vast majority of the accounts and those were willing to stay with you.

I bought the place I worked for back in 1979 but I serviced all the accounts so people had no problem staying with me.
Some of the accounts I did right up until I retired last year so the portion I paid for good faith was very beneficial to me.
 
Aug 29, 2018
49
20
8
Real Name
Chris Westerman
About the only way there may be increased value in buying a cleaning business is if you were the tech that cleaned the vast majority of the accounts and those were willing to stay with you.

I bought the place I worked for back in 1979 but I serviced all the accounts so people had no problem staying with me.
Some of the accounts I did right up until I retired last year so the portion I paid for good faith was very beneficial to me.
I've been our customers only interaction for the last 5 years, we are in a rural area and not much for competition .....at the moment. We've got 2 decent commercial accounts that we service vct and carpets also a large resort we clean all the condos once a year. I know most of our customers would stay with me it's how many has the current owner already turned away? Just got the 2018 financial and we grossed 125000, her net was -9000 ☹ no way a banks giving out a note on those numbers. This has been a great learning experience for me I'll keep you guys posted
 

Anderson

Well-Known Member
Aug 16, 2006
2,781
1,139
113
60
Belton Texas
she just had it for a tax writeoff......

gotta be careful she may have debts payable.....

but if she has all bills payed....
maybe offer her 10-15k....then walk......
she is shutting down within 6 months anyway...
and half her accounts are already up for grabs.....

you could get a new TM and van and pick up some accounts as you know most of the customers in that small community and they are loyal to you....
 
Last edited:

longkenn

Well-Known Member
May 7, 2011
4,929
2,364
113
Winston-Salem, North Carolina
www.sunbreezeclean.com
Real Name
Kenneth Long
Business Location
United States
Think of this. You are buying a business that needs a serious turnaround. It has lost one half of its revenue in fairly recent times. The industry average says as a whole a carpet cleaner loses 1/3 of its customers each year so you have to constantly be adding, not losing, customers. This business is losing customers as evidenced by the sales. I purchased two cleaning companies customer list. I paid about $700 dollars for the first one and it was a well known company in my area. I purchased the second one for $500 that included his domain and company name. I bought his cimex for $1,500 and it was almost new.

This business you are contemplating isn't worth $120K. I just about choked when I saw the price. Go buy two new butlers, or two new ProFires from Rob and use the other 40,000 to market your business if you want to spend money wisely.
 
Aug 29, 2018
49
20
8
Real Name
Chris Westerman
Think of this. You are buying a business that needs a serious turnaround. It has lost one half of its revenue in fairly recent times. The industry average says as a whole a carpet cleaner loses 1/3 of its customers each year so you have to constantly be adding, not losing, customers. This business is losing customers as evidenced by the sales. I purchased two cleaning companies customer list. I paid about $700 dollars for the first one and it was a well known company in my area. I purchased the second one for $500 that included his domain and company name. I bought his cimex for $1,500 and it was almost new.

This business you are contemplating isn't worth $120K. I just about choked when I saw the price. Go buy two new butlers, or two new ProFires from Rob and use the other 40,000 to market your business if you want to spend money wisely.
Amen to the Profires those things look boss! One other thing id like to bring into the conversation is all of her 75,000 (in her head) of assets she has bought over the years....any of it worth having? I mean air movers scrubbers spinners crbs, all the tools if we get started on our own we would have to buy alot of that stuff anyways. If she says all or nothing is it hard to build that inventory up from scratch?
 

OxiFreshGuy

Well-Known Member
Nov 12, 2016
1,323
1,051
113
Real Name
Matthew Frein
Business Location
United States
Man listen, I started my own this year with a partner , we bought a van and a TM.

Really only opened our doors and started advertising in September. We will end the year around $50,000 in sales. That wasn't even filling our schedule 50%
 
Mar 30, 2010
24,444
8,734
113
45
texas
Real Name
jason fisher
Business Location
United States
Amen to the Profires those things look boss! One other thing id like to bring into the conversation is all of her 75,000 (in her head) of assets she has bought over the years....any of it worth having? I mean air movers scrubbers spinners crbs, all the tools if we get started on our own we would have to buy alot of that stuff anyways. If she says all or nothing is it hard to build that inventory up from scratch?
All that's worth having but it sounds like she is forgetting that they are not brand new and have lost value over the years. You don't need to buy everything when you first get started, while they are nice to have you can slowly get them as you grow.
 
  • Like
Reactions: mrotto

ACP

Well-Known Member
Apr 9, 2014
3,691
2,634
113
36
Washington
Real Name
Bjorn Marshall
Everything posted here I agree with. The numbers are terrible, the equipment is old and worth next to nothing.

Also it's a job not a business.

You can buy a subway franchise in a big city like seattle for $120k, the profit is much better than the $9k and you never touch a single sandwich lol.
 

OneBlueSummer

Active Member
Sep 30, 2012
109
54
28
Real Name
Charlie King
same as @ACP

Equipment/van isn't even worth registering or spending money starting to repair and maintain.

Sure the dehues and fans scrubbers whatever ya offer her 2k or watever. Sure she will say "oh no I want to sell everything as a package" it aint gonna happen. Id just move on.

I can get you any customer list you want for 100$

Since you've been the face of the company you need to put your face big on everything you use to promote.

Id get a logo, social media set up and start pumping as coming soon like crazy, site, doorhanders, cards, shirts, vinyl.

Then get a loan on a certified warrenty promaster (they double the warrenty on certified preowned for free ) you buy for your personal vehicle, buy a Relia-Built truck mount on a CC, wands hoses etc on another cc. That way you bypass a bank giving you a "business loan" and all the bs they might want.

While your waiting for your custom TM to get built you start pounding doors and handing cards to everyone you meet. Sell like crazy, by the time the TM is done you quite your job as you will have so many people waiting for you already lined up and push like hell.