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View Full Version : What's the business worth. 500k revenue


Riverstonelc
01-04-2013, 10:13 PM
I have a lawn care and landscape business in tn . We do a little over 500k in revenue per year. Have 4 dodge diesels , one is a mow bed and one a flat bed. Have a 2011 Kubota tractor and back hoe have a 743 bob cat . Have a couple of mowing trailers and a big tex dump trailer, and big tex goose neck. Have aerators, 5 exmark walk behinds 2010 ,1 grandstand 2011. 1 Kubota 326. And an exmark metro 26 and a couple other bagged mowers. 15 or 20 weed eaters ,2 pole saws , 8 various Stihl chain saws, a nice portable office, 30 by 31 metal building 2 very effective websites . A staff of 7-9 people that are well trained. A well located lot with rent of 500 ., 1 acre comm property ,retail sales if wanted . We run 2 mow crews and 1 landscape crew and have 1 rig for back up. Owner just needs to manage , estimates,billing , production control , quality control. Take home 100-140 k per year .. Just looking for help with a value or thoughts. Thanks

snomaha
01-05-2013, 08:30 AM
I have a lawn care and landscape business in tn . We do a little over 500k in revenue per year. Have 4 dodge diesels , one is a mow bed and one a flat bed. Have a 2011 Kubota tractor and back hoe have a 743 bob cat . Have a couple of mowing trailers and a big tex dump trailer, and big tex goose neck. Have aerators, 5 exmark walk behinds 2010 ,1 grandstand 2011. 1 Kubota 326. And an exmark metro 26 and a couple other bagged mowers. 15 or 20 weed eaters ,2 pole saws , 8 various Stihl chain saws, a nice portable office, 30 by 31 metal building 2 very effective websites . A staff of 7-9 people that are well trained. A well located lot with rent of 500 ., 1 acre comm property ,retail sales if wanted . We run 2 mow crews and 1 landscape crew and have 1 rig for back up. Owner just needs to manage , estimates,billing , production control , quality control. Take home 100-140 k per year .. Just looking for help with a value or thoughts. Thanks

Lots of variables so this is general.

I would want to see the equipment and the customer base separated - if not I'm offering .25 cents on the dollar for the equipment. I would value the customer base on what I thought my net income could be. I want to pay back the money with after tax income in 3 years or less.

Is the 100k profit or profit and your salary?

djagusch
01-05-2013, 09:11 AM
A cpa would give you the best advise. I would take any price from ls with a grain of salt.
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ELS Landscape
01-05-2013, 09:32 AM
(assets - liability) X 2 is the basic formula.

Efficiency
01-05-2013, 01:20 PM
EBITDA times 2-3 plus a lowball on the assets and you retain liabilities

klogan011
01-05-2013, 05:09 PM
Something doesnt seem to add up. How do you have 7-9 well traing wmployees. Either you have 7 or you have 9. Lets say you have 9. At 40 hour a week 52 weeks a year and a rate of 10 per hour. Which I imagine landscape crew makes more. Thats 187, 200 not including taxes or insurance. Rent is another 6000. Lets say 300 a week in gas. Prob low for that many trucks. Thats 15600 per year. That puts u at 208200 total. Add 140k in profit that 350k. That only leaves 150k for other expenses and material for jobs. With equipment you have listed sounds like your doing hardscape which. That would be tough to have that high a profit margin on 500k. None of that even includes power bills, vehicle insurance, dot tax, blades, maintenance on equipment, payroll tax, ect. Just me figuring quick numbers in my head. Sorry for rypos. This was postwd on phone.
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Riverstonelc
01-05-2013, 05:22 PM
1 small paver job. Mostly lawn care and landscape maintenance . Mow guys are 9-11 per hour and landscape guys are 10-11 per hour. 7-9 guys means I have seven guys working in January and nine in season
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txirrigation
01-05-2013, 06:06 PM
There are a lot of basic formulas. I hear that you should sell it for what someone could realistically pay off in 7 years.

wbw
01-05-2013, 07:12 PM
2-2.5 times benefit to owner.
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ELS Landscape
01-05-2013, 07:19 PM
EBITDA times 2-3 plus a lowball on the assets and you retain liabilities

That is you buying right?

32vld
01-05-2013, 07:34 PM
There are a lot of basic formulas. I hear that you should sell it for what someone could realistically pay off in 7 years.

My whole life I never heard 7 years.

It has always been 2 to 3 years. And the 3 years was reserved for a special to die for to good to be true must have business.

EagleLandscape
01-05-2013, 08:32 PM
Who in the world is dumb enough to make an investment right now that has a 7 year return?

That's ridiculous, and even more ridiculous in this economy.

If you are taking a little north of 100k home each year, go ahead and deduct 50k-80k for salary and normal living expenses. So let's just say the company's true profit is around 40k then /yr. Business valuation is going to be around 80k-120k, including equipment.

No one with more than 100k to spend, or the financial stability to get a loan for said amount, is going to pay any more than that for a company, aaaaaaannnnddd.... they would be wise to ask you (the seller) for a 50% seller finance carry for 3 years approx.

Your maintenance accounts are under 12 month contract I assume, so there is the possibility the customers won't like the new owner and not renew once the current contract expires. And because of the small size of the company, I assume you are driving all of the landscape/hardscape installs. if you are driving all of the landscape and hardscape installs, I would actually deduct that amount of annual sales from the revenue number and revisit the formula above.

Here is the problem. Your company does not run on it's own, due to its medium size. You are the driving force behind it, and that's what brings the value to the company. once you leave/sell, the company's ability to produce the same sales is greatly diminished. Unless the new owner can sell more, but then you arent entitled to his greater ability of sales, and should not realize an increased value for something that others created.

take my comments for what they are worth. I've purchased 4 companies, and looked at about 100. Possibly the value could be 1 years net profit after officers salary is accounted for, and the fire-sale value of the assets. Hope this helps.

knox gsl
01-05-2013, 08:42 PM
Riverstone PM sent

wbw
01-05-2013, 10:59 PM
That is you buying right?

Good point. I sell my customers for between $1350 and $1500 each. If I were to buy customers I would never pay more than $500 for them and then the seller would have to carry some of the financing.

Efficiency
01-06-2013, 09:18 AM
That is you buying right?

Id buy at 2-3 x NET and would sell 3-4 x EBITDA
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grassmasterswilson
01-06-2013, 01:58 PM
Was told mowing accounts around $0.30 per gross dollar and applications at $1.00-1.25 per gross dollar. Would not know how to price landscaping since jobs may not be reoccurring income.