Buying out a competitor?

[binki]

There are valuation guides out there but it doesn't sound like you are buying a business but rather a list of potential customers that you have to cold call. Much different than moving into her location and taking over so when that repeat customer walks in you are there. That would, IMO, devalue the customer list quite a bit unless she introduces you to all of them as the new owner.

Get her phone number so when they call her they get you. Maybe make an arrangement with the landlord that you get a sign that directs the walk-ins to your location.

FFE will have a fair market value that you can find out. For consumables, that is a crap shoot. You may end up with a bunch of crap you can't use. On the other hand there is always eBay...

 

[visual800]

I cleaned out a major sign company here in montgomery a could years ago. I can tell you now aint nothing worth nothing. I sold a 6x10 router with 2 heads AND a full neon lab for $6000. This router was over $60 when they bought it. Nothing has value anymore and esspecially a client list. I would be more interested in her junk than her clients

Im thinking about 25-30% myself and like pat said if they wanna throw the client sin that woudl be fine, there is not guarantee they will use you anyway

 

[timkaz227]

I have done this twice, most recently in december. This was on our Offset printing side of the business. What we did was pay a % of sales for their existing customers over a period of 2-3 years. 15% first year, 10% second year etc...That way you only pay for actual work. The files should come w/ it as a way to increase sales for both of you. We sent letters to their customers notifying them and made personal visits to some of the best customers.

 

[TyrantDesigner]

Damn Tyrant....sounds like somebody having the audacity to try and sell their stuff really pisses you off.

Not at all, if there is someone I consider 'competition' ... this situation is the spoils of war. Victor gets to pick the bones.

 

[btropical.com]

Being in the salvage business I rarely pay over 10 cents on the dollar , low ball her and give her a card leave . Wait for it , wait for it , wait for it " insert sound of ringing fone "

 

[high impact]

You have received some solid advice and I am pretty sure you can pick it out of the clamor. We obviously don't have enough detail to make an accurate recommendation however your original valuation is way too high. Try to buy it in a package lot if possible and take it off their hands - but don't do it without it being a smoking hot buy. If that doesn't work then just attempt to purchase the individual pieces you want/need. Client list is only worth what you feel it is (probably not much) and then the true value will be found in what you do with it after you have possession. Clearly there are no guarantees but possession of the list gives you the opportunity to be proactive before your competitors.

 

[TopFliteGraphics]

I would not pay more than 10 cents on the dollar for the material. The main thing is, just like buying a used car, be prepared to walk away empty handed. The person who is willing & able to walk away, always has the power in a negotiation. If you business is doing okay now, do you really need her customer list? As someone else said, when she closes her doors, were will those people go? You'll probably pick up a few of them anyways.

 

[Techman]

As soon as they close and give about 8 days.. Go over there and post your newest flier on the door. Keep doing that with a new flier for weeks. No need to purchase the client list.

You will get more new cleints from that old bizz better than buying the client list. Which by the way is about useless. The old clients will find someone new any way.

 

[Gino]

There are so many things to go wrong, I'd probably stay away unless there was something in particular you really wanted. Make an offer and walk away.

If they are going out of business, most likely it's for more than one reason.

• Probably used inferior products
• Not good turnaround
• Not good service
• Not a professional product
• Not qualified to do most types of signs
• Low prices causing them to go out of business

Any one or two of those problems should probably encourage you to not want their customer list.... as to they won't like your methods or prices.

It's kinda like writing all of their customers names on individual pieces of paper and throwing them all up in the air. Whatever lands might come your way, if you make yourself available. However, if you buy their list, you're kinda obligated to use the same tactics and methods they used to keep them as customers, whereas if they come straight to you.... it's still your ballgame all the way.

 

[Mosh]

I have bought out several shops. 25% is what I pay, or it isn't a deal. Who else is going to buy it, pretty specialized stuff so you should mention this fact to her. Stand your ground, if she needs the cash she will do it, but let her sit a few days if she wants more.

 

[mark galoob]

ive cleaned out more than one of my competiters and here is what i have done...

one thing i think everyone has missed here is her phone number...

i personally dont think the client list is worth anything but that phone number might could be worth a bit...

materials should be pennies on the dollar because you dont know how they were stored or how old they are...

equip should be about .10-.25 on the dollar depending on what it is...computers and printers on the low side, machinery like paper cutters and whatnot on the higher side.

mark galoob

 

[Gino]

So, let me get this straight.

• If you are upgrading your equipment... it's worth its cost and holds it value quite well.
• If you are going out of business, the exact same piece is worth nothing ??

So, how does this theory work ?? When you want it to or what ??

 

[FireSprint.com]

I make no apologies and am brutal when it comes to something like this. Look at the books and compare against the client list. That is where the real money is to be made. If there was any to begin with.
Vinyl has a finite shelf life and you don't know how long it's been sitting. Pennies on the dollar there. Everybody thinks their leftovers are worth a million bucks.

Nothin' personal just business.

Yes.

 

[mark in tx]

The value of customer lists is usually inflated.
No guarantee the customers will stay with you.
If they had salespeople servicing the customers, and you don't retain the salespeople, the customers will probably follow those salespeople wherever they go.

Equipment-at least 10% devaluation per year of age. Oftentimes 30%.

Material- Unless its new in the box, pennies on the dollar.

 

[JR-Folientechnik]

Everyone, has very good arguments pro and con...but have you consider...maybe the business is not the problem, rather the one running the business? Maybe the clients are great, but personalities don't fit! Maybe the material is new, maybe the shelf life is up! Ask the owner what they want before you suggest anything. (max.30%) If machines are involved find out how old they are, and the new price, and (do they work!)

If you are married ask your wife! If not ask a trusted friend! (Look together 4 eyes see more than 2....

Good luck... and remember deals that are to good to be true! are just that!
JR

 

[Dave Rowland]

we did just that... we bought out the bigger failed company in our area and relocated to their premises. The contacts/phone lines are the important things!

After 10 years, it was good move although quite costly at the time and we were no longer under-cut... however other competition is now in our area.