buying a hydronics business

Does he want 100K/year for 2 years or 100K total?

Besides him training you what else do you get for 300K?

Is it necessary for you to buy this business to start or can you survive on plumbing for a while to get started.

If you can survive with plumbing until you have a better grasp on hydronics I would do that UNLESS you are convinced that buying his business would generate a lot of income right from the get-go.

For the large amount I would want to see his client list, and financials showing what he has paid himself.

Do you get the company name and phone number?

How many hours a week does he work for that salary?

Tools, truck, inventory?

40 hours a week, 50 weeks a year= 2000 hours

So you need to add at least $50.00 and hour to your labor rates just to pay him

If all three if you want 100k a year, $150 per hour per billiable hour just for salary.

Its doubtful you will have that many billable m, productive hours a year, so maybe pushing 200 per hour

Here is a really good deal 😁 to maybe help with some number crunching

All the right questions...tread very carefully. Mad Dog

High price tag for a client list and paying the previous owner a salary. Does this include equipment, inventory, vans, etc. You need to see financials before you go all in. If you want to learn more about hydronics in today's world there is TON of solid information to learn from and find the right supply houses that you can use as a another resource. If you have another revenue stream such as regular plumbing that helps and you can grow from there. I went out on my own this year. Granted I get a steady paycheck from my fire job and do this as a part time gig. What I found is if you focus on quality with minimal advertising at first you will get repeat business and referrals. Don't over extend yourself. Read up on small business !

1. You are purchasing an income stream. If the cost of that income stream is more than the actual income you are expecting, then it is not worth the price. (maybe over a few years to recover the investment) This would include the phone number, customer list and service agreement payments that you need to honor for the remaining months until you can collect the renewals yourself.
2. You are purchasing durable tools and equipment including: trucks, tools, job-site trailers, pipe threaders, copy machines, file cabinets, and all sorts of things needed to operate the business. All these items have been depreciated on the books and depending on the age of the equipment, may have no real value accounting wise. So 10 cents to 50 cents on the dollar for most of those items is fair, and rolling stock has a blue book value. You are paying the wholesale number, not the retail number. The seller is like trading in the vehicles and you are the car dealer. You don't pay retail for that stuff. What could the seller get it he was trading that stuff into a car dealer?
3. You are purchasing inventory. If there is new equipment like boilers, heat exchangers and water heaters, and they are less than 2 years old, then you can sell them as new and can afford to pay 50 cents on the dollar. Small parts like relays, circuit boards, controls and thermostats, then those are 10 to 20 cents on the dollar. Many of those parts that are over 2 years old are something that you may sit on for 10 years and never be able to sell to a customer. You want to get those inventory parts down in value to something you really don't want. Many items can be purchased as needed with internet suppliers shipping the next day. So having a large parts inventory over and above what you may want as truck stock is really an expense you want to keep as low as possible.  My inventory when I sold my company was in the books at the price I paid for those items and not deprecated.  You need to discount that number based on what you can expect to sell within the next 2 years.  
4. Real Estate or location rental is to be negotiated based on the size of the business and your existing location. Is this going to provide you with an affordable answer to growing your business that you may have been running out of your garage. So that must be considered.

With all that to consider, you need to look at the books and tax returns for the last three years to determine if you can get value from what you pay for the business.  

Don't forget, most mom and pop outfits had longstanding, one on one personal relationships with their plumber. You're not that guy. Many of those clients will just go elsewhere....The only times Ive seen this work successfully for the buyer, is a gradual 5 year transition working alongside the seller everyday..."My nephew is taking over." Mad Dog

Are Your customers stupid?

A story about the father & son, long standing, “50+ years in business company” that purchased my company.  I would write a letter every year to my customers thanking them for their business, wishing them a happy new year and telling them something positive about doing business with me.  One year was that the price of the service agreements would not go up this year, another time was that the cost of labor on our flat rate service price book was down 4% and that would be reflected in the new price book, and sited 2 examples of labor only flat rate repairs, like: clean & adjust electronic ignition old price $62.59 new price $60.09.  One year I just told the customers that My son was doing great in Track & Field and holds high school records in 5 different events. He was offered a scholarship to The College of New Jersey to be on their track team. But I digress…

The new owner of my customers read a letter I prepared with the "good news" that I was partnering up with the new company and the "good news" is that there will be more technicians available for emergency service calls and more years of experience and several other "good news" items about the purchase of my company by their company.  This corny communication was what my customers were used to receiving from me and my son.  They often commented  on some of my comments in the letters to me and the other mechanics during their maintenance visits, so I knew that many customers read these letters. 

The buying company’s father read the letter I prepared and said this crap was too corny to originate from this firm and filed the letter in the circular bin next to his desk.  He did agree that my customers should be notified that there was a new owner and composed a no nonsense business letter and mailed it to all my customers on the new company letter head.  The majority of these letters went into the customer’s circular file as the letter head and return address on the envelope was unfamiliar.   After several months of customers not recognizing the new truck with a different name and different mechanics arriving to service their equipment,  Mr. J wanted to know if all my customers were stupid.  Can’t they read a simple letter that explains what has transpired?  

I just had to agree that he knew better than I about how to operate a business at a profit the way his father told him to run a business.  Heaven forbid that I might inform him that a letter with my return address and my letter head would have been a better idea.  Even if it was not corny and said exactly what the letter he sent out on his letter head.  Jeff knew what he was doing and my customers were stupid for throwing perceived junk mail in the trash.

BOTTOM LINE: If you go through with the purchase, expect to operate the newly purchased company as if there has been no change, and you are just the new guys that work for the existing company. Answer the phone the same way the previous owner answered the phone. Send letters and invoices out using the envelopes with the company name and address the customers are used to. Change the name slowly over time if that is your intention. 

Consider not changing the name at all and tell your customers that you purchased the new business and let your customers know that you will be sending letters and correspondence with the new name. You are growing and becoming more successful.  Ray Kroc did not change the name of his company after he purchased it from the McDonald brothers in 1962.  Somehow I don't think I would like to be eating a Big Kroc, even if it did have two all beef patties and special sauce.    What Crock of stuff did that special sauce come from anyway?