If I were to sell, what's the ballpark value?

Discussion in 'Business Operations' started by dmk395, Jan 24, 2013.

  1. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    I didnt read all the post but.

    most other industires can sell for 2.5 their gross per year.

    Lawncare - its a bit tuffer

    What I personally would pay would be the total of the following

    1. the fair market value of the equiptment total

    2. fair value for shop/land if owned

    3. I would look closely at the accounts. this is why you buy a buisness. but its also why the guy is selling it. If it doesnt work with his methods of operations or numbers, it may not work with yours either. your only going to retain and keep his accounts if you charge a similar price, you service in a similar or better method, and you can do both of those and be happy with the profit left over. IF the buyer evaluates the accounts and finds that they will fit then I would pay:

    50% of guestimated yearly profit on seasonal contract accounts. (so an account of 40k with 30k in expense, profits 10k, i would be willing to pay 5k for a 1 year contract, possibly more for a multi year.

    and / or 2 months of income on accounts that where under a service aggreement that was billed "per cut"

    and /or 1 month of income on non contracted (job leads) accounts figuring that I would be able to retain 50-75% of them if i can charge the same price.

    4. Then there is a wild card - do you get to keep the name? marketing material? website? Even if you buy out a company, and have a website, these things are worth money if they are professional. even if you change the name and phone number, do you think the calls will stop rigning the old number ...nope it will ring for 2 years. so the marketing has a value.

    5. last wild card, am i eliminating a major compeditor? that can have value. Its one thing to buy a business and expand into a different area that you previously where not it.

    But its a whole another to eliminate a compeditor. your not only buying his accounts, but your buying future work that is already in your area. heck you might have accounts already next door to his, and thus you can take his accounts, your accounts and become very profitable and gain a ton of efficency in some cases. In others, its just nice to know that when your placing bids, that is one less you have to worry about bidding against. I have a major compeditor that works tightly in a subdivision that I work tightly in. I would bet that I get 40% of the work, and he gets 40% of the work, and the other 20% goes with small guys. I would pay ALOT to buy that guy out and pretty much "own" and be exclusive to that subdivision. My marketing material would have better results, I could raise prices, i would have better efficencys. by eliminating him, I might even get to the point that the "smaller guys" taking the 20% couldnt even compete in that area.
     
  2. Will P.C.

    Will P.C. LawnSite Senior Member
    Posts: 965


    Everyone thinks their business is worth way more than it really is. Same thing with people selling their house. They are often shocked when the Realtor suggests a listing price.
     
  3. scott martoccia

    scott martoccia LawnSite Member
    Posts: 45

    I have read 3-4 months gross for accounts + fair market value for your equipment, but will all come down to what you can show on paper (tax returns, p&l, secured contracts, etc). If you are not in a big rush I would work on cleaning up the business on paper to make it more attractive.
     
  4. ryde307

    ryde307 LawnSite Senior Member
    Posts: 540

    For your size 2-3 months of gross is common plus market for equipment. That buys your name your contacts your books everything. There is still a ton of info that would effect that but thats a start. if you have been the same size same accounts for 15 years that helps if this is a 2 year old business it hurts.

    I think I miss understood but you said profit before your salary of $70,000 was 60,000. So you are negative 10,000 every year on your books? So obviously you wouldn't need to be paid so put the 70 back in but then someone still has to do your job. Odds are you are very involved so on the cheap end the new business has 50-60k in new labor/help to pay to cover it. Back to $0. This will not help to sell the business. Again I might have misunderstood your first post though.
     
  5. dmk395

    dmk395 LawnSite Senior Member
    from Ma
    Posts: 992

    My odd ball guess would be 100k all in for everything with a non compete for 3 years. New owner makes it back quick, BUT it's still a lot of work. Just food for thought, and was wondering what others thought. Thanks
     

Share This Page