Buying a landscape nursery?

Discussion in 'Business Operations' started by shovelracer, Mar 26, 2007.

  1. shovelracer

    shovelracer LawnSite Silver Member
    Messages: 2,008

    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.
  2. CNYScapes

    CNYScapes LawnSite Senior Member
    Messages: 916

    I would have it appraised by a professional. There are hundreds of business on the net that can do it or find someone local. They will probably start with the real estate and equipment value then multiply cash flow by like 4 to 6 times for the final value.
  3. Bustus

    Bustus LawnSite Member
    Messages: 181

    I would think cash flows would play a big role in that. Current ratios and quick ratios plus growth are only a few things I would be interested in. I would suspect asking for more than yearly sales is common, but it could be different in this case.
  4. godzilla

    godzilla LawnSite Senior Member
    Messages: 400

    What is the land + current stock worth?

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