03-26-2007, 07:17 PM
I run a small LCO that is 50% maintenance 50% installs. We have had a growth rate of 50-56% every year for the last 3 years since I started it. I have an opportunity to purchase a nursery from a family friend. The owner is looking to retire, but wont sell to just anyone. Problem is that he isn't sure what its worth and I'm not either. He claims to do about 450K / yr in sales. That doesn't seem like much to me. Question is what is it worth? The profit of the owner is probably no more than 20-25% of his sales after he pays for everything. In conversation he mentioned that he felt it should be worth between 1.5 and 1.75 times his annual sales. So around 700K. I was thinking more no more than his actual yearly sales. Around 450K. Seems like when people sell their LCO's they tend to go for around 70-80% of the yearly sales. I guess a nursery is different. Any thoughts.