How to value your Client list...

[PFirebird]

Hi All,
Can anyone tell me some guidelines for finding a value for a company's client list and phone number? In other words, how would one find out how much someone would pay to have their phone ring like ours?
Thanks in advance.

 

[bike_reck_ben]

So an up and coming company wants to buy your little black book? At the face value, a client is worth all the profit that you will make from them in the reasonable future. To dig in a bit, what's to saw this new company won't mess up the account and the client returns on their own.

I think an interim solution would be to hire the new company as a subcontractor. That let's them earn some cashflow and frees up your crews for other accounts. The downside is they can under bid on the same jobs that you bid with the intention of hiring them for the work.

 

[PFirebird]

So an up and coming company wants to buy your little black book? At the face value, a client is worth all the profit that you will make from them in the reasonable future. To dig in a bit, what's to saw this new company won't mess up the account and the client returns on their own.

I think an interim solution would be to hire the new company as a subcontractor. That let's them earn some cashflow and frees up your crews for other accounts. The downside is they can under bid on the same jobs that you bid with the intention of hiring them for the work.

Thanks for the reply, but no it's not another company wanting it. I'm closing up shop and have a large client list I'd like to sell and have someone else handle. Just not hearing any way to go about placing a rough value on it.
The book is res and comm customers we've worked for for over 20 years. There are no contracts with us, just strong relationships with customers build over the years that have our phone ring continuosly.
I dont' know if the method you mentioned works here I don't know how to predict the amount of work someone new would actually land for our list.

 

[ClimberBusinessman]

Valuation of a company widely varies, but sometimes is a high as 2 to 3 times annual gross revenue, especially if equipment and shop is included as part of the deal. You might want to talk to a business broker, which is the equivalent of a relator for businesses.

 

[mikewhite85]

I sold my business as a package in 2014 basically for the value of my equipment to another contractor we worked with. It was easier than selling everything individually before our cross country move. He's still running the company and doing well.

The big national tree and landscape companies are constantly making acquisitions. Prime candidates have multiple crews and well over a million per year in revenue and do a lot of commercial work. If you fit that bill there's a market for you. If you're a smaller 1 crew residential operation, it's a very tough sell beyond the equipment.

But I mean, even old beat up equipment is going for a mint these days.

 

[JustPlainJeff]

I sold my business as a package in 2014 basically for the value of my equipment to another contractor we worked with. It was easier than selling everything individually before our cross country move. He's still running the company and doing well.

The big national tree and landscape companies are constantly making acquisitions. Prime candidates have multiple crews and well over a million per year in revenue and do a lot of commercial work. If you fit that bill there's a market for you. If you're a smaller 1 crew residential operation, it's a very tough sell beyond the equipment.

But I mean, even old beat up equipment is going for a mint these days.

Yup, this. To me, a business is only worth the equipment that is included with it. Even contracts are void after the business sells. There is no guarantee that you'll retain any of the customers that the previous owner has/had. Now, when selling a company, of course I'd try to get as much for it as I can, and if the perspective buyer wants to pay for my existing customer base, so be it!

 

[Maintenance supervisor]

"No contracts" little to no value.
I was a topiary pruner for several years and changed companies 3 times, my clients followed me. Whom ever you sell has to have a good reputation or the client base will move on.

 

[JimR]

Thanks for the reply, but no it's not another company wanting it. I'm closing up shop and have a large client list I'd like to sell and have someone else handle. Just not hearing any way to go about placing a rough value on it.
The book is res and comm customers we've worked for for over 20 years. There are no contracts with us, just strong relationships with customers build over the years that have our phone ring continuosly.
I dont' know if the method you mentioned works here I don't know how to predict the amount of work someone new would actually land for our list.

Without contracts, a list of your clients is not valuable at all unless they like the new owner and their work. Paying for a list of possible potential customers in my opinion is a crap shoot.

 

[ClimberBusinessman]

Contracts and customer lists are worth a huge amount if the seller signs a non-compete agreement (which bars him from opening the same type of business within, say, a 100 mile geographic radius), and a non-solicitation agreement, saying that he won't solicit the customers on the list. Customer lists alone can be worth about 2 times annual gross revenue, but it is virtually worthless without a non-solicitation clause. Another factor that plays into consideration is how dependent the company is on the owner. If everything revolves around the owner, customers will be very attached to the owner and won't want to move on to the new company. At a larger company, if there are multiple crews run by multiple foremen, customers are more attached to the company brand than the individual, which makes the acquisition much more likely to be successful, as long as the majority of the employees stick with the company, and this makes the business more valuable.