sell business?

Discussion in 'Business Operations' started by WRICH, Sep 30, 2005.

  1. WRICH

    WRICH LawnSite Member
    Posts: 7

    I have a profitable business in the long island hampton's area and would like to sell all of it off including equipmet to take caretaker positions. The equipment is fairly straight forward as far as what it is worth, but what are accounts worth and is there a market for this??


    Briefly - Grossing $350,000, 2 full crew set ups, plow route, no employees to go with.
     
  2. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    If you're talking a true "turn-key" operation, I would think close to a year's gross revenue, fair market value for the equipment. Other things to consider would be is there land/shop included and is your customer base contractual and willing to sign over with the new buyer.
     
  3. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Posts: 1,847

    Rod, where do you get the one year's gross? I know fert businesses get sold for this, but i have not known a maintenance operation to go this high. I would not go much highter than a couple year's net, plus assets of course.
     
  4. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I would agree with the above thou I think you'll want to offer a 15-day training program where you at least show the new owner all the ins-and-outs of the equipment, and walk-through each job and certainly meet with each and every customer to explain things and make the transition as smooth as possible.
    I mean, for say a 30 thousand dollar or more transaction, it may be worth typing up pages of hints and tips and what-to-do when/if, etc...
     
  5. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Senior partner in an A & D (Acquisition and Divesture) firm told me this years ago. I seem to remember it can be as high as 1.5 times. How much difference is there from a fert business vs. maintenance?

    A couple years net might be as high as a year's gross too btw.
     
  6. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Posts: 1,847

    From my calculations, the main difference between maint and fert is the client acquisition cost. Fert is much higher in my experiences, thus driving up the value of the fert business.

    Additionally, fert business are generally more profitable. When you combine these two factors, you will obviously get a higher multiple of earnings when time comes to sell.
     
  7. GreenUtah

    GreenUtah LawnSite Senior Member
    from SLC, UT
    Posts: 866

    agreed. It's not out of line for valuation to be 2.5 times net plus equipment and misc. materials and goodwill. For a maintenance company to fetch those sorts of numbers, there would need to be long term contracts in place and room for expansion of services or clientele.
     
  8. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I disagree.

    We are finishing our 11th year of maint full time now (offering many other services) as well including fert, aeration, prunning, mulch, snow plowing, etc., to name a few. I even have most of our first year clients as well. Our longevity, reliabilty, and commitment to quality says alot when I decide to sell out.
     
  9. GreenUtah

    GreenUtah LawnSite Senior Member
    from SLC, UT
    Posts: 866

    Disagree? Long term contracts. 11 years is long term. lol
     
  10. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Hmmmm...got me there :D
     

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