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View Full Version : How do I sell my business?


HandleyLandscaping
03-28-2006, 11:10 PM
Whay is the going rate for Landscaping maintenance jobs? I heard 3 times the monthly fee. Is it more, or less?

rodfather
03-29-2006, 06:10 PM
certain services derive more. example if you have enough chemical/ fertilization. it sells for .80 to 1.00 on dollar of revenue.
hope this is helpful.

Why is that, it makes no sense? You mean to tell me that years in business, # of clients, # of employees, diversity of services, total revenue, net profit, equipment value, value of land/property, etc., etc., etc. don't play into the equation?

Remind me not to call you in a couple of years when I sell out.:nono:

HandleyLandscaping
03-29-2006, 08:09 PM
I'm only selling the jobs. Not equipment, etc.

Why is that, it makes no sense? You mean to tell me that years in business, # of clients, # of employees, diversity of services, total revenue, net profit, equipment value, value of land/property, etc., etc., etc. don't play into the equation?

Remind me not to call you in a couple of years when I sell out.:nono:

Bunton Guy
03-29-2006, 09:40 PM
3 months of revenue is what I have payed for the 3 companies we aquaried. Owner financing helps to!

lawnservice
04-01-2006, 11:08 PM
Why is that, it makes no sense? You mean to tell me that years in business, # of clients, # of employees, diversity of services, total revenue, net profit, equipment value, value of land/property, etc., etc., etc. don't play into the equation?

Remind me not to call you in a couple of years when I sell out.:nono:
you might (most likely will) be very disappointed

years in business? might have a value to you...but not a buyer

# clients ...means nothing. I could run an ad tomorrow advertising "free lawn care" and have many many clients...that are worth nothing to a buyer

# employees...again a value to you...not a prospective buyer. chances are many of your employees will be let go anyway

equipment value...used equipment = very little value to a buyer

land/real estate...sell it seperatley for the biggest return

net profit is your only real value to a prospective buyer


just my opinions

rodfather
04-02-2006, 08:16 AM
you might (most likely will) be very disappointed

years in business? might have a value to you...but not a buyer

# clients ...means nothing. I could run an ad tomorrow advertising "free lawn care" and have many many clients...that are worth nothing to a buyer

# employees...again a value to you...not a prospective buyer. chances are many of your employees will be let go anyway

equipment value...used equipment = very little value to a buyer

land/real estate...sell it seperatley for the biggest return

net profit is your only real value to a prospective buyer

just my opinions

I'm glad, cause you are sorely mistaken

J&R
04-02-2006, 10:40 AM
rod- You are right. If i sold my 25 year old co. With net return of over 80,000 per year. The price would be 3 times gross sales.

mrusk
04-02-2006, 11:34 AM
rod- You are right. If i sold my 25 year old co. With net return of over 80,000 per year. The price would be 3 times gross sales.


Thats a good one!!!!! Lets say you were netting 20%, that means you were grossing 400k. You really expect some knuckle head to pay you 1.2million for your company???

rodfather
04-02-2006, 12:07 PM
I find it a shame that too many members here think and talk like a "lawn boy" instead of business owners...perhaps I need a change of scenery. Or perhaps some don't understand the difference between buying accounts and buying a true turnkey op.

2 clowns mowing
04-02-2006, 12:26 PM
3 1/2 times the per works for us

J&R
04-02-2006, 01:14 PM
Thats a good one!!!!! Lets say you were netting 20%, that means you were grossing 400k. You really expect some knuckle head to pay you 1.2million for your company??? Lets say you just make 20% because are a lowballer. I run around 60% net.

lawnboy
04-02-2006, 03:51 PM
Lets say you just make 20% because are a lowballer. I run around 60% net.



60%??? no way. Maybe 40%... Maybe....

lawnservice
04-02-2006, 11:09 PM
rod- You are right. If i sold my 25 year old co. With net return of over 80,000 per year. The price would be 3 times gross sales.
your business would be for sale for a very long time

mrusk
04-02-2006, 11:15 PM
Lets say you just make 20% because are a lowballer. I run around 60% net.


RIGHTTTTTT. I am a low baller because i net 20%??? Did i ever acctually say i netted 20%?? NO. But it is well known that the industry average is some where in the 20% range.

hoyboy
04-03-2006, 09:30 PM
Actually, the industry average is under 10% as of last year. Anyone who claims they are getting 60% is probably not paying himself a fair salary before counting net income.

I've been through the sales process on both ends. 2 to 3 times net discretionary cash flow (do a google search on this term) is the going rate. It's hard to put a value on gross sales because profit margins vary hugely from company to company.

GreenUtah
04-04-2006, 05:32 PM
A deal is worth whatever terms can be satisfactory to both parties involved. There are more buyers looking to expand operations (that actually have the cash to make a deal) than there are buyers seeking a standalone business. Because of this fact, the buyer will likely have their own people, equipment, methods, etc. and find very little value in things that you find so much value in. When taking this into account, you'll find net being the driving force and measuring stick for most of the purchases of this nature. 2.5 times annual net plus adjustments for equipment, remaining value of long term contracts and RE are the numbers that you'll be talking about with anyone that employs an accountant. Goodwill of a brand can be a wildcard, but not significant in expansion buyouts. If you'd like a business to remain just as you have it, you will likely be tied to financing it or perhaps setting up a succession plan for an existing employee or family member.

Evergreenpros
04-08-2006, 07:50 PM
1.5-3x net for service businesses is average. If you are just selling accounts then it's usually 1.5x net. If you can't establish net return and you still want to buy them, for whatever reason, then it's usually 10-15% of gross for the account for uncontracted accounts and more for contracted accounts.

Businesses that are around longer are worth far more than 5 year or less companies. 15+ year businesses with good profit margins and decent equipment would be worth upwards of the 3x level if not more. If you have a quality manager staying with the business it's worth more.

These numbers exclude all real property.

These numbers are justified by simple calculations based on the time and money needed to build a business. In addition, the financing terms also change the value of the business. Just like in the housing market, if the interest rates are low and/or the owner finances part of the business you can get more.