ECN Forum Forums General Topics of the Trade General Discussion Area Buy out my competitor?

I am an electrical contractor in a small town. I have been in the trade for almost thirty years and in business about one year. I have one employee. I am very busy, making good money, and no one is behind in paying me. My competitor down the street has been in business for thirty years and was the only electrical contractor in town until I came along. He has 5 employees. He called me today and offered to sell. As you might imagine, I have a lot of questions.
1. Since I am doing well should I even consider buying his business?
2. How would I determine a fair price?
3. His real estate and equipment might be worth more to me than the "business" itself. I am thinking about offering to buy them and telling him to sell the company to someone else or just close it. Thoughts?
4. If he sells to someone else, or goes out of business, shouldn't that be a boost to my business without doing any more than I am already doing?
5. Have any of you been in a similar situation?
Any comments or suggestions welcome.

I can only go on instinct. It seems that one year in business does not reflect the likelihood of long term success. The potential complications are compounded with more employees. They may not be good employees. I, personally would be happy to be in the position you are in now, and let things grow on their own. Sometimes, the faster you rise, the faster you fall. As they say "a bird in the hand is wirth 2 in the bush".

I would ask why he is selling his business. If you buy a failing company you will have a lot of problems. What type of work and what quality did he do?
Just some thoughts.

Hmmm.....I am interested to see what becomes of this.
Maybe this guy feels the pains of some competition from you and wants to "sell the boat" before it sinks.....

What exactly is a person "buying" when they buy a company? I understand the property and equipment part, just don't know what other tidbits are included....
Thanks,
Tiffany

Tiff;
A good Q, if Bob's electric had a customer following per Bob( insert charizma, shmooze, xmas bottle, etc), and not the 'electric' part then a greater percentage wil not be retained.

Thanks for your comments. I forgot to say that he is retiring and that is why he is considering selling. Also, in answer to some of your other questions, their reputation is not so good. It is just that they have been the only game in town for a long time. I also would not want to continue to use their name because of this. That is why I was thinking that the best thing for me might be to buy some or all of their equipment, but not the business. After all, if they do not have a loyal following, then their business is just a list of names. Nothing more than you could get from the phone book. One other thing, I have tried to be vauge on purpose because I promised not to tell anyone that he might sell. I didn't want anyone here to be able to figure out who he is. I am doing very well and I think that the best thing for me might be to sit back and watch what happens. Thanks again for your replies.

I also think I'd let his client list part of the business just naturally migrate towards you, with the thought that bad customers often have to use poor contractors, since no one else will touch them. But, if I was in good shape financially, I'd offer to buy some of his tools and equipment. And I'd cherry-pick through them, for an honest price. After all, the guy is retiring...