What should I pay for this contract?

[Mr Greenthumb]

Hey all. I'm looking at purchasing a maintenance contract from a landscaper. that has a minimum value of 1000/month. The contract made $10200 last year. He has it listed at $5000 which seems quite expensive to me, but I have never purchased an existing contract before. What would you pay?

[Little's]

How to get lawn care customers - Vol 2

This question has gone around many times in the past here and there are some varying views, but the consensus usually ends up being that a contract is worth about 1 month of its pay. So up to $1000 in your case depending on a few variables give or take a hundred or two.

__________________
Northern California

[Steve]

Hello!

Hey all. I'm looking at purchasing a maintenance contract from a landscaper. that has a minimum value of 1000/month. The contract made $10200 last year.

I don't think it matters what it made last year because these contracts are perishable. For all we know, they all ended last year and no one would ever sign up with that lawn care business owner again!

Can you tell us a little about the contract? Is it for one client? Multiple clients? Etc.

[Mr Greenthumb]

The Contract is for 1 client. The job takes 5-7 hrs/week to complete and runs from april to october. The client supplies a 60"z mower and an atv with trailer for cleanup. I just provide all other tools.

One month sounds fair to me, i was thinking 10-15% of contract value.

[Steve]

Why is he selling it? Did you ask? How long is the contract to last? Can you talk with the property manager there or work the place for a few times to see if everything is ok?

[Mr Greenthumb]

The Landscaper is getting out of the biz and moving out of town. I will be meeting with the landscaper and the client later this week.

I know that I am not exactly in this line of business but I think I would be real sceptical about paying much of anything until the client signs a contract with you and you have it in hand. At that point it would amount to a "finders fee" and not a "contract purchase". I think this changes how much most people would value the transaction for. I agree with the others, a contract, as a contract, is perishable (in my opinion, especially when it is not a contract between you and the client) and is worth only about one months pay at the most.

I think I would tell the landscaper that if you and the client decide to sign a contract then you will pay X amount. If you decide to not sign it you will pay him nothing or only Y amount....

Good luck and hope this helps,
Eli

[Mr Greenthumb]

thanks for all the input. I agree with you, I wouldn't pay anything until I met with the client and have a contract signed.

[lawn-guy]

i have to agree with most everyone on here you dont know if 3 weeks down road the customer is gonna cut all ties or what i would at the least meet with both of them and also have seller sign a no compete contract

[Mr Greenthumb]

--> Anyone have any samples of what a no-compete contract would look like?