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What would be fair price for this biz?

Discussion in 'Starting a Lawn Care Business' started by bjm95, Oct 8, 2009.

  1. bjm95

    bjm95 LawnSite Member
    Posts: 52

    I am a newbie considering purchasing a existing landscaping biz.

    This business is listed for 85k.

    97 residential accounts
    Exmark 60' zero turn mower,
    32'' Toro with sulky, all the necessary equipment such as pack back blower, weed whackers, edger's etc.
    2002 GMC Crew cab & two enclosed trailers, one is 14' the other 16'
    It's net is 55k

    I am thinking 65-70k. Any thoughts would be appreciated.

  2. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Posts: 1,072

    Interesting question, can you give more details;
    Estimated value of the truck and equipment.
    Gross revenue.
    Region and area.
    How long has this business been established.
    97 accounts, it is real hard to say what this is worth without seeing service and billing records.
  3. bjm95

    bjm95 LawnSite Member
    Posts: 52

    gross is 158,600
    est on value of equip is 25k
    expenses is 153k including a 39k owner salary
    locate din central Florida
    established for 3.5 years
    Presently they operate out of a warehouse & have the tools necessary to do maintenance & repair on their equipment

    it's though a broker but told it has good books and records and everything is verifiable.
  4. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Posts: 1,072

    What I would have to look at is what I could do with the business.
    Is it what you want and where you want it? Can you manage those accounts, increase the profitability? Do those tools come with the deal? (I assume the wharehouse does not). Do you know what to do with them?

    From an entrepreneurial point of view I would consider making an offer of 52.5 K; $25k for the eqpt, and one half last years net for the accounts. The business only made 5K profit last year and the sale price must come out of the profit, so assuming that the profit earning is sustainable it is going to take forever to pay off 85K. Yes, they may well laugh at 52.5 K.

    But what is most important is what you could do with this business versus what you could do with the same amount of money. If you have a lot of experience in this business, then you could quickly increase the profitability. If not then it is hard to imagine you doing better than the previous owner. It comes down to how much you are willing to pay for a 39K per year job.
  5. bjm95

    bjm95 LawnSite Member
    Posts: 52

    good points. thank you.
  6. steelie man

    steelie man LawnSite Member
    Posts: 22

    Why would the expences be 153000. 97 accounts should take you and another guy 3 to 3.5 days to do. Equipment is only worth 25k w/ the truck? Sounds like the old equip. Up here a company's selling price w/ equip is 30% of the last 2 years gross from mowing. How much of the 158000 is mowing? 97 res customers could mean a lot of different things, only do one thing for this customer and only do one thing for that customer. How much of the 158000 is steady weekly income, and how much is gravy?

    My $.02
  7. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Posts: 1,072

    The more I crunch the numbers the more I want to see what is meant by 97 accounts.
    Residential, commercial, how much per acre, contracts in place, etc.
    Three years is not a lot of time to build up a highly profitable and loyal client base.
  8. bjm95

    bjm95 LawnSite Member
    Posts: 52

    97 rez accounts strictly mowing. the owner doesn't cut just manages the biz and also sell something else that's why he is selling, to concentrate on the other biz.

    there's 2 full time and 1 part time employee, a payroll service and rent of 425 for a warehouse, plus other expenses.

    the equipment is 3 years old

    last year the owner cut and had a higher gross of about 17k for doing other stuff, trimming etc...
    Last edited: Oct 8, 2009
  9. bjm95

    bjm95 LawnSite Member
    Posts: 52

    by that math he should be asking $100, 250. Gross in '08 was 158,700 and '07 was $175, 500. Again the extra 17k in '07 was doing odds and ends.
  10. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Posts: 1,072

    This makes me think that it could be a good deal for someone who wants to be a working owner/operator, but perhaps not the best deal for an investor.

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