How would assign a monetary value to this company?

[WaterTight]

An old friend/prior trainer of mine is wanting to sell his pre-existing checkatrade. It's got nearly 600 reviews at 9.9/10 and would likely generate me anywhere between £1k-£2k a month. Could well be more.

He does same work as me so leads are relevant, I've bought leads from him from time to time over the years and also "rented" his phone and had little or no problem getting calls converted into paying jobs even with his regulars - despite the fact I wasn't him. I just briefly explained who I was, that I work with him and nobody backed out, so it worked fine.

We can do trial so I can confirm call volumes are what they used to be.

The other option would just be for me to make my own checkatrade and build it up. But the liklihood is it would be a long time before it earned me much so the main inducement is to drop straight into high call volumes.

If you can imagine that this was something that would interest you (presuming that for many of you it would not be of interest) how would you assign a value to it?

Thanks

 

[SimonG]

£0.00 or less. All it is is a list of people he has done work for. Whats the price tag put on this? No gaurantee of future income from it and to me it sounds a little bit dodgy.

 

[Scott_D]

A percentage of what you earn from it?

 

[SimonG]

A percentage of what you earn from it?

That's probably the best way to go. Then it's a matter of trust. But either way its trust. You trust him that its kosher and he wont set up another one straight away and take all the work. On a percentage he trusts you to notify all the work you have done.

 

[WaterTight]

Sorry should have been clearer. It will be paid off as a set weekly amount so basically hire purchase. I would also do a trial to check it's as busy as it was previously. I used to rent it for months and found it was a pretty good deal.

But what he is suggesting now is pay a weekly amount for 3 years then own outright because I don't have money upfront to buy anyway.

Now I know there's lot of issues like will the website be surpassed by something else in the meantime, will someone else come along who does it better and takes all the leads etc. But working on the presumption/taking the risk that this doesn't happen, and bearing in mind I'd be making profit off it from the word go, how would you work out what figure is reasonable to pay for it (albeit split over 3 years of weekly amounts)

 

[Masood]

I'd still go with a percentage.

 

[Ch4 plumbing]

Would you actually be buying his company?

If not then if he got "bored" of renting his Check a Trade account to you then he would just take it back, you wouldn't have a leg to stand on.

 

[WaterTight]

I'd still go with a percentage.

Makes it very difficult to buy on this basis though?

Would you actually be buying his company?

If not then if he got "bored" of renting his Check a Trade account to you then he would just take it back, you wouldn't have a leg to stand on.

He wouldn't, I know him well. But I think we'd have something drawn up by a solicitor anyway.

 

[Scott_D]

What if you get found out by Checkatrade

 

[WaterTight]

Don't think it's a problem as it's not his name, it's a company name. And presumably you can have a checkatrade where feedback comes from a variety of employees. People come, people go, different ones might take over. I imagine it's ok

 

[WaterTight]

I'd find out for sure first.

 

[mfgs]

So are you buying the company or just buying the checktrade part of the business? Has he given you any of the company accounts to look over to see gross and net profit, turnover etc? You would need full access to the accounts to be able to decide how much the company/part of the company is worth.

 

[Howsie]

How much does he think it's worth? Offer him 70% of that and then pay the rest off as a percentage up to 120%

 

[WaterTight]

So are you buying the company or just buying the checktrade part of the business? Has he given you any of the company accounts to look over to see gross and net profit, turnover etc? You would need full access to the accounts to be able to decide how much the company/part of the company is worth.

Just checkatrade part. But there is nothing else, just his van and tools. He's retiring Dec this year.

I don't think I need accounts or anything, I've rented his mobile off him previously for months at a time and so all I'd need to do is have a trial period of a month or a few months to check calls still come in like before. It's just a checkatrade page which advertises the same stuff I do and has lots of feedback referring to the same stuff I do. Which is small maintenance. So it's a high lead generation, small job type affair.

How much does he think it's worth? Offer him 70% of that and then pay the rest off as a percentage up to 120%

I have no savings to my name unfortunately otherwise I'd probaby attempt a negotiation based on an upfront figure.

 

[rocketmanbkk]

There's no guarantee they'll use you.

They might only want to to be the other chap.

I get that, we only want you, you've been recommended etc.

I value it at £0 but the % per job is the way to go for X amount of agreed time.

 

[WaterTight]

As I said in the first post "I've bought leads from him from time to time over the years and also "rented" his phone and had little or no problem getting calls converted into paying jobs even with his regulars - despite the fact I wasn't him. I just briefly explained who I was, that I work with him and nobody backed out, so it worked fine."

So I'm not worried about that.

 

[plumben]

As rocket says i'd value it at £0 as most people want the person who's been reviewed previously done the work, it might be okay for new customers to have X amount of reviews but existing customers might just get someone else

 

[rocketmanbkk]

Then you've nothing to worry about.

If you're paying a % per job for an agreed time then you'll not lose

If you give him £10K & you get diddly squat you lose £10k

Only you can make the decision

 

[lame plumber]

your not the checkatrade company your purporting to be if you take it on, checkatrade wont be happy and if it needs renewing you cant take it on. So at the end of the day its worthless, you would be better spending £600 on setting up your own checkatrade account, it only takes a year or so to boot up and everyone gives 9 or 10 so not hard, but it only takes one bad report to bugger it up despite what checkatrade says. I have seen a good customer base passed over to another company disappear in less than 6 months, cutomers arent stupid, they want the bloke they trust and if you arent the man they wont use you unless they are desperate. you may prove me wrong but management changes can make or break successful companies

 

[WaterTight]

Then you've nothing to worry about.

If you're paying a % per job for an agreed time then you'll not lose

If you give him £10K & you get diddly squat you lose £10k

Only you can make the decision

A set weekly amount seems more appealing to me and him than a percentage. We've worked together doing a percentage before. But either way, set weekly or percentage, the main thing I'm confused on is how you work out what it's worth.

Say, for instance you predict conservatively it will make you £35k over 3 years. But you've got to factor in risks like it being superseded by other companies etc..

So what figure do you value it at?

your not the checkatrade company your purporting to be if you take it on, checkatrade wont be happy and if it needs renewing you cant take it on. So at the end of the day its worthless, you would be better spending £600 on setting up your own checkatrade account, it only takes a year or so to boot up and everyone gives 9 or 10 so not hard, but it only takes one bad report to bugger it up despite what checkatrade says. I have seen a good customer base passed over to another company disappear in less than 6 months, cutomers arent stupid, they want the bloke they trust and if you arent the man they wont use you unless they are desperate. you may prove me wrong but management changes can make or break successful companies

I get what your saying. But if Checkatrade don't end up having a problem with it, given the fact it is a small job lead creation web page which I have taken over for months at a time previously and had no trouble staying busy even with his existing customers who all seem happy to use me I'd not really be worried about that.

I'd just be worried about having no idea how you assign a figure that's not insulting cheap or way over-priced to it.

 

[mfgs]

Just checkatrade part. But there is nothing else, just his van and tools. He's retiring Dec this year.

I don't think I need accounts or anything, I've rented his mobile off him previously for months at a time and so all I'd need to do is have a trial period of a month or a few months to check calls still come in like before. It's just a checkatrade page which advertises the same stuff I do and has lots of feedback referring to the same stuff I do. Which is small maintenance. So it's a high lead generation, small job type affair.



I have no savings to my name unfortunately otherwise I'd probaby attempt a negotiation based on an upfront figure.

So if you are taking the phone number from him and the checkatrade account is the only way he advertises then anyone who has his number will now be calling you. So surely seeing his accounts will show you how profitable his business has been over, say the last 3 years, and only then can you look at putting a value on it. If hes been making 10k per year then you will want to be paying less than if hes been making 50k per year.

 

[WaterTight]

I know what you mean but it's a bit of special case because he doesn't use it to it's full potential and turns away a lot of stuff for his own reasons. So I have to estimate what it's worth based on what I made when I was renting his phone.

 

[WaterTight]

Something like 80% of the calls he gets are from new customers. It's designed to be very good for creating passing trade.

 

[rocketmanbkk]

I think it's risky

As someone said it only takes one bad feedback.

Risky is my view but it's not my decision

How much per week are you thinking of paying him? You must have a number. & fit how long?

 

[Rickster123]

All seems a bit dishonest to me. And I'm hardly whiter than white!

 

[WaterTight]

I don't see it as any more dishonest than phoning up a company because locally they've got a good reputation and them sending an engineer over to you who started last week.

But I might be missing something

 

[rocketmanbkk]

They're phoning because HE had a great reputation that HES built up & people trust HIM to be honest & do a good job like others have made positive comments on.

Do you see where this might go?

 

[PlumbBobBob]

the biggest hurdle I can see is checkatrade finding out a "new" company has paid for an old company's feedback and chucking you out on your ear with nothing.

 

[WaterTight]

It's a company name on the page, not a person's name. My experience of having his phone was 90% of people phoned up and said "Is this xxxx Plumbing?"

But yes some will know him and expect to get him. And just like before I'd explain he's unavailable but I work with him and can chat to them about what they need doing. Which previously resulted in no lost leads, happy customers and further good feedback. There's got to be about 30 of his feedbacks which mention me by name anyway

 

[rocketmanbkk]

I agree

It's very risky imo

 

[WaterTight]

the biggest hurdle I can see is checkatrade finding out a "new" company has paid for an old company's feedback and chucking you out on your ear with nothing.

Yeah I would check with them first.

 

[tamz]

Personally i see it as having absolutely no monetary value. All you are depending on is good faith.
If you really want to take this up, work on a %age commission as there are no guarantees for you here.

 

[julesverne]

if you know the guy really well and i mean really really well then i cant see it being a problem but it is your risk not mine.
Dont see the issue with you taking over the chackatrade part.
Companies get taken over all the time its business no one lives forever. What about father son business relationships. If youve already used here details before then whats the big deal. Dont see chackatrade having a problem all they want is your they are a business your just a customer to them aswell.
I have a lad working and a minute fraction insist on me and they dont always get me. because i cant always be there they get over it. Sure you might lose a small percentage but most will be just glad your there.

But its your risk and yours alone. But if it was me I would be interested and not as pessimistic as the others on here sometimes you have to take a risk in life and business

 

[WaterTight]

Thanks mate.

No I honestly appreciate everyone's cynicism. Partly why I posted it was hoping to get a raft of warning and issues mentioned I might not have thought of and to see if I had answers that satisfied myself. So far they have.

I think it's hard for me to get across why I trust the calls will be what they will be and I will make what I will make. He was the first person that trained me, we've worked together on and off for years and he's been talking about doing this for years as he's got less into work and nearing retirement. Because we focus just on small jobs (another thing I think many guys here find a bit alien) the customers can be less loyal and it's based on generating lots of new passing trade which it has always done well and I've no reason to doubt it still does (a no agreements signed trial could confirm this.)

My only dilema is the price as what he has suggested sounds a lot (£83 per week for 3 years, plus I would pay for cost of checkatrade)

I can see that selling if for less, in his mind given how much work it took to build it up, seems pointless. But in my mind it's a lot.

It's less for the prospect of buying it. More for the fact that I can probably double my earnings from the word go rather than spend 3-5 years building my own up.

I'm erring on it being too expensive but in order to make a counter offer I was seeking advice. Although it seems like that advice is the counter offer should be £0.

 

[julesverne]

It seems expensive. I think a trial period would be best for you. When you rented it i fhe past how much did you make from it? That would tell you if it was worth it.
Is there no way you can some money to make a smaller offer.
Can you even cope with the extra work load that this may bring