Thinking about selling client list

[lumberjackson]

How are client lists typically valued? What kinds of things should I be looking for when talking to potential buyers? Are buyers usually more interested in buying a company that comes with well maintained equipment, or is the value of a client list independent of the rest of the company's assets?

My company is just my wife and I. We've had our business here for just over 2 years and all of our growth is organic. I do a little contract climbing, but we have a pretty solid customer base with almost half of our customers being repeat customers. We gross about the same as a full time 2 man crew at a local company does, but with me doing everything and my wife only working 1 or 2 days a week. We're moving out of state next year and I'd like to get a little bit out of the little company I've built so far, but not really even sure where to start.

Anybody have experience with this or something similar? Even if it's just what questions I need to ask myself or what information I should figure out?

Thanks!

 

[Reach]

My thought is to talk to your accountant, but a customer list for a two year old business is probably worth very little unless you have a pile of rock solid transferable maintenance contracts to ensure the buyer is purchasing something of value. You would also need to sell the company name, phone number, PO Box, web address, and the like to see much value.

In my opinion though, the main value of a small tree service is largely the equipment, although the intangibles (i.e. the list above) have value if the company has a long-standing, solid reputation.

What will you be selling, only the client list? Or will you sell the name and such, or any equipment? You’re leaving the state, so getting you to stay onboard for a year or so in transition won’t work, that would be a minus in my book - as a potential buyer, I would worry the customer list is just that, a list of names to send ads to, in hopes of a sale, since the customers don’t know me, and don’t know my crew, since your “crew” is moving on as well.

Maybe make up a list of the “assets” you would be selling, and post them here with a sales pitch to explain why I (and anyone else here) would want to buy what you’re offering.

 

[arborcareman]

Well said Reach…I fully second all you made mention of etc.


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[owScott]

Had a small company leave the area years ago and gave me a customer list and a stack of bids already done but not approved. Made a bunch of calls only a few jobs panned out. Better route is to refer the customers with a 10% commission for a set time period. I personally wouldnt pay money for a list of people to call about work. Better off mailing advertisements, will net you more customers for less.

 

[ATH]

the only way I'd consider it (and I probably wouldn't buy a customer list...) would if you sent letters to each client explaining "Thank you for choosing ________. Unfortunately, I will be moving out of the area and no longer able to be your arborist. However, I excited to let you know that have partnered with ___________ who I fully trust to be able to meet the high expectations you have set." Which means you should really screen who you are selling it to...which makes it difficult to find a buyer who is trustworthy enough for you to say that, but isn't too busy to take on more work.

I'd probably also want your phone # and company name...

 

[lumberjackson]

Thanks for the helpful feedback. Looking at it from a buyer's perspective, that all makes sense. I wouldn't buy my company if somebody tried to sell it to me! I have zero rock solid maintenance contracts or anything that would guarantee any future work for the company. I do, however, think there is value in the effort I have put in taking care of each of the people I have worked for and made sure they were happy with the work I did and building a positive relationship with them.

I think a referral system is the best way to pass that value to someone else - These customers have trusted me with their trees, so there should be value in me referring the customers to someone I trust with their trees.

What systems would you use to coordinate referrals? Give the new arborist my old phone number and have them keep track of the jobs that come in from there? How do I make sure he doesn't "accidentally" forget about some jobs? If I keep the number and refer calls personally to him, that seems like an extra step my customers have to do which reduces value to them which I don't want.