How to properly buy out a competitor.... -- ?

[B&BGaryC]

We are in the process of negotiating a buy out of one of our competitors. He is tired of the business, got a job offer for more than he is making, the guy who was going to buy his business didn't have good enough credit and wasted two months time getting it all together, he is ready to sell to us. I have evaluated his equipment, and a fair value on the equipment puts the business (Name, phone number, logo, customer list, non-compete agreement, letter of recommendation to his customer base etc.) at anywhere from $500 - $3000. (I get this figure by subtracting the value of the equipment from his asking price of the business.)

I would like some solid advice on how to handle the merger. He only was in the phone book for the first 4 years, he never lettered his van and never bought any advertising. He just did work comparable to ours (or better) at a cut throat price and let his business be an exclusive secretive thing where people could only find him by being recommended by one of his customers. He said his rich customers loved it, it was kinda like a status thing. Do I build a cheap re-direct website and a google maps to explain our acquisition of the company? How do I handle this exclusive secret carpet cleaner thing? I am the back-up call on most of his large accounts already, so I am a shoe in for the commercial work. How do I make sure his residential customers survive the transfer?

 

[bob vawter]

CRASH???

 

[Steve Toburen]

Sounds like you are buying his equipment, Gary, and not much more. Was his business so "secret" that he didn't keep a record of customer's addresses? If not, I'd just write a letter explaining the transfer and include a "welcome" coupon for 20% (or whatever) for their first cleaning. If there are enough customers to make it worth your while you could route his phone number in on a separate line and answer it with both company names for the first year, such as "Jon-Don/B&B Cleaning".

Hope it works out better for you folks than it did for him! BTW, good to hear from you!

Steve Toburen
http://www.SFS.JonDon.com

PS I'll leave your Google strategy up to someone more dialed in than I am on the Internet.

 

[Newman]

When I bought my business, I considered the old guy reccomendation letters sent out to all with pics of me and the old guy shaking hands, warm and fuzzy crap to inform the customers and pass on the baton .

IMHO forgetaboutit.

Why give the customers a reason to not call you? Suprised as Mrs. Finkelgroover may be when she calls in, she is still calling to BOOK a carpet cleaning job. They are not shopping around. They want to schedule a job and get on with the gardening. Get used to telling the well polished story over and over and over again. It gets annoying but has faded over time.

I have no way to put in a jar and measure what percentage of customers I kept in the transistion. I did book nearly every call that came in.

 

[joe harper]

Gary
What were his GROSS SALES....for the past years...? Especially LAST year..?

 

[B&BGaryC]

Haven't gotten those figures.
I know he is between me and aprox $60,000 in regular commercial work. I imagine he grosses a hunnert to a buck twenty.

Pretty sure we are just buying his equipment and getting the business as a signing bonus. He has a nice machine and well kept equipment.