Buying an existing limo business

[Doc]

First off, I am new here and I can not tell you all how impressed I am with the overwhelming support that this forum provides. I have visited many forums pertaining to a wide variety of business topics and you guys as a whole are with a doubt the most supportive group I have encountered. Now on to my question. I have owned and operated several businesses but never one in your industry. I would like to know what specific questions/information that you would ask if you were considering buying an existing limousine company. I have allready gatherd a long list of ideas just from cruising around the forum, however I would like to hear specifics that you as "insiders" would definately want to know and what red flags I may want to look for as well. Thanks in advance for everyones help.

[TxLimoGuy]

Basics are going to be the same as evaluating any potential business purchase:

1) 3 years tax returns (minimum) and 3 years of bank statements. If they won't provide that move on.
2) How much in Accounts Receivable and what age
3) How does Accounts Payable look? Age?
4) Any contracts you would be locked into taking over (ie excessivly large yellow pages contract, magazine ads, etc)?
5) Do they own or rent a facility? What are the lease details or is the property included in the purchase price?

Limo Specific
6) Detailed list of company owned fleet vehicle type, age and vehicle value
7) Do they operate with employees or independent contractors? (IC status will require additional scrutiny and due diligence)
8) What percentage of the business is corporate vs retail & night out. (corporate are more likely to be repeat customers).
9) Are there any customers which have a contract rate and if so can you see the contracts
10) Any customers which comprise a significant percentage of the work being done? (potential risk if you lose them as new owner)
11) 2-3 years vehicle utilization data if available (not available equals sloppy management)
12) What software are they using
13) List of current rate structure being charged by vehicle type. Call around to the competition and see how their rates stack up comparatively.

[Doc]

Tony
Thanks for the quick response and genuine desire to help others.

[LIMOJESS]

And also just to do a google searcxh on the company, owners etc.

And to check thier online reviews.

Important thing is how much money comes in from revenue and how much goes to expenses.

[Greg K]

If available in your area, check court records for cases on the company and owners/officers. Look for anything that may affect you as future owner. (unsettled lawsuits or ones recently dropped that may get refiled, or settled in favor of company but being appealed.)

Check the BBB's site for complaints and who they list as owners/officers. (many people DO check the BBB site when picking companies).

-Greg

[HeavenOnWheels]

Let me share my personal experience with you all. I have been in business for the last 15 years in one thing or another. Mainly security and private investigating. I have been an investigator for 7 years and have recently moved into the limo business. As stated in one of my previous posts, we purchased an existing limousine business as well. I dotted all my i's and crossed all my t's. I did all kinds of investigating on this company that I possibly could. Money was there, accounts were there, contract was there as well. After paying a nice sum of money to the seller, he moved back to Russia. I have since found out the "client list" he gave me after closing was bogus, ie wrong names, wrong numbers, addresses that didnt exist. I have also found out that he ended up selling his client list to another operator, hence being paid twice for his company and all I got out of it was a few measly sedans with him out of the country!

Be careful who you deal with! Make sure they are outstanding members in the limo industry and talk to other operators about who the seller is. If he is unknown or has a bad rep, run, and run fast, no matter how good the deal looks!

J. Roman

[Skerdian]

Heaven on Wheels,

That really sucks, I'm sorry to hear it.
If you plan to buy a company, dont just collect copies of their paperwork. Spend a few weeks with the company. Check out how they operate, how many calls they get a day, if their accounts are really viable, etc. Do not just purchase based on numbers on paper. Look into every grime of their work; how many workers they hired/fired over a certain time period, etc. Usally, a company with a bad rep. will have one even after a management change. Worst chase senario, change the company name and send a letter of change to the accounts on file; rebrand and market your new name--it could do wonders for you.

[LIMOJESS]

I have even heard stories or operators after selling thier business deciding to start again small.

Or even after the company is bought, a couple of the dispatchers and drivers leave to set up thier own company.

[Doc]

Once again i want to thank each of you for your advice and input. I will keep you updated on my decision and I am sure I will have a lot more questions to come.

[Dack of Access Atlanta]

My personal thought is "why buy a dying company?"

It's not smart by any means

[HeavenOnWheels]

I don't think anyone bought a company that they knew was "dying." It is nice however to buy a company and have immediate cash flow from existing customers and current advertising.

BUT, don't ever just take their word for it or even bank statements and paperwork, see it first hand. Like Skerdian said, spend a few weeks with them, drive with their drivers, do some pick ups with them. This will help in MANY ways. And if the owner refuses, then WALK away. Might be the smartest decision you ever made!


Originally posted by Dack of Access Atlanta:
My personal thought is "why buy a dying company?"

It's not smart by any means

[Limo Scene]

There is no need to assume that because a business is for sale that it is "dying". Sometimes people decide to retire and have no heirs to take over or they have no employees with enough collateral to purchase the business.
Sometimes health reasons force a sale. Sometimes people just want to go home to Russia.
There are many reasons to sell a healthly business. In fact when a business is at it's healthiest is a good time to sell and reap the financial reward.

[D. Hartson]

Buying a business that is profitable or not can be a good thing!

If you are new and just getting into the business, being able to buy a business for the right price can make your telephone ring now! Just because the owner of the business didn't do a good job with it, mabey his spending habits were not that good!

If you can purchase the business for a good price and you are just starting out, this could be good for your bottom line. Be smart and look at all of the documents first.

Tony is right!

[InTheLeftLane]

I talked with an operator just the other day and another limo company owner in the area is just fed up with the headaches of running the company.

This is the difference between what Michael Gerber called the Entrepreneurial Spasm of a technician who really wants a diff job, not build a company.

The acquiring company is entrepreneurial and growing, the acquired company is a successful technican who actually wants to continue doing runs and being less involved in the details required to run a business.

[maestrolimo]

Hello everyone, as you will soon find out...I am a total NOOB. Please hold your applause. lol has anyone ever heard of "All Exclusive Limo Service Inc." located in Los Angeles CA? He is selling his business and I am researching his company but I can't find much of anything to help me. The only red flag i've found so far is the fact that his company does not have a website. Please help the Noob. Cheers

[Fusion Limos]

Maestro,

It helps to search first on the topic you need info on, or a question about.
Then if you can't find any info on that specific topic you will want to start a new thread instead of bringing back a dead topic or one that isn't exactly relating to your question.

The search button saves time so you find answers to questions asked several times over, and also saves the veterans from answering the same question over and over.

It will also help to use correct punctuation and sentence structure to make it easier to read a persons post to understand the question.

Not bashing on you, just trying to help you get a quicker response and save everyone valuable time.

Welcome to the forum! :-)

[nvthslex]

Yea I found it really good just to start up small. I only have one Lincoln stretch 10 passenger.
But I am licensed for only 7 passengers excluding the driver.

But I have kept my costs all the way down. My biggest expense is insurance, and I was just able to pick up a good deal $4000 for 6 months. Age is 21, hence the rate. Had to pay it all at once though.

The stretch is also paid in cash, and now just taking in bookings and putting money on the side.

What I always found in business is expenses if you can keep it low, you have a better chance of making it work for you in the end.



Side note on vehicles: what does everyone think about the Cadillac DTS 2004 stretch ? Turning radius and maintenance ?


Thank you

[karim101]

Well first of all for your help your limo has to be clean and the driver too. And if the former owner has any clients you should give them the best service you can to boost up the business. You should also get entertainment if your clients have kids

[BLVD Limo]

Well first of all for your help your limo has to be clean and the driver too. And if the former owner has any clients you should give them the best service you can to boost up the business. You should also get entertainment if your clients have kids

What entertainment do you get for the kids?