Buying an existing brokerage business

Brian77

Hi everyone,
I am not sure if this is the correct place to post this or not.  I am looking into purchasing an exiting tree brokerage business.  The owner is asking $150,000 for the business which essentially has no hard assets other than a client and contact  list.  The business had a net profit of 289k last year and is on track to do 330k+ this year.  To me it seems like $150,000 is alot just for some contacts I could potentially build on my own over years time.  I guess my question is, is it worth it to try and buy ready made customers for a business like this, or could the same be accomplished on my own  with some time and hard work.  I have the entreprenuer bug and really want to branch out on my own.  I do have a backround in the nursery business and an extensive knowledge of plant material, but no real experience in brokering deals, expecially from west to east coast.  Thanks to all 

robertj

It is not uncommon for service type businesses to sell for 1-2 times earnings. This one is at about 50% - so on the surface it seems like a good price. While you may be able to create the contacts and client list yourself - how much you you have to invest to get to the point where you are generating $289K in profits?
You`ll want to do more due diligence before you buy and be sure to have an attorney draw up the purchase agreement.

ToddF

we bought our first salon because of the client base. It does help out. What you want to make sure of is that there is some type of clause in the sale stating he CAN NOT contact any of these clients. Since he built the business it would be easy to sell it and recontact those people. I find it strange there is no hard assests, there should be something, land, trees, small building. I would find it very hard to buy something like that with no assets.