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Need help on buying out price

JJLandscapes

LawnSite Senior Member
Location
Plainview NY
Had a strong partnership for 3 years working under 40 hours a week but my other job is expanding too much and i need to concentrate on that more since that has more potential. My partner is going to buy me out but how exactly do you set a value on the business?

Besides the equipment which im going to price by how much it can be sold for in the current condition.

the rough numbers come out to about 90k a year the business brought in for our first full time year


Do side jobs get tallied in? since they arent guaranteed to be done every year
 

wolfsburg57

LawnSite Member
Location
Lebanon, Indiana
Don't know whats done in lawncare, but we would normally value businesses in terms of multiples of ebitda or free cash flow. And we would net out non-recurring or extraordinary income/cash, but I don't think I would eliminate all of the odd job income as some would probably happen in future years.
 
OP
J

JJLandscapes

LawnSite Senior Member
Location
Plainview NY
Yea its mostly a maintenance company. side jobs are mostly shrub trimmings.. every year we had about 2-3 sod jobs or installs in the 2k range
 

J Hisch

LawnSite Bronze Member
Location
Evansville IN
Whatever you are willing to settle for and what he is willing to pay. no good rule of thumb
 

theturfboss

LawnSite Member
Location
Indiana
Does not matter what the bus. is doing in sales, what you put in your pocket is is the key. Would you give $90K for a bus. that grosses $90K and makes no money? Just my thought (as I have purchased a lawn care bus. in the past to add to our service).

Value of equipment + some multiplier of annual profit. Generally, when a partner leaves on good terms, he does not want to profit to the extent from his former partner that it cripples the bus. Also depends on how much debt is involved, and if you have to pay off your share or does partner assume debt.

Value of equipment may equal value minus debt on loans. 1.5 would be a good place to start for a multiplier (you are charging 1.5 years of profit). Also NO PROJECTIONS on profit, look at the past and where your at currently.

Just my thoughts.
 
OP
J

JJLandscapes

LawnSite Senior Member
Location
Plainview NY
Does not matter what the bus. is doing in sales, what you put in your pocket is is the key. Would you give $90K for a bus. that grosses $90K and makes no money? Just my thought (as I have purchased a lawn care bus. in the past to add to our service).

Value of equipment + some multiplier of annual profit. Generally, when a partner leaves on good terms, he does not want to profit to the extent from his former partner that it cripples the bus. Also depends on how much debt is involved, and if you have to pay off your share or does partner assume debt.

Value of equipment may equal value minus debt on loans. 1.5 would be a good place to start for a multiplier (you are charging 1.5 years of profit). Also NO PROJECTIONS on profit, look at the past and where your at currently.

Just my thoughts.

90k is almost profit. no debts at all


I remember people saying when buying a business from someone they pay 1 months gross plus equipment? maybe someone else has done the same
 
OP
J

JJLandscapes

LawnSite Senior Member
Location
Plainview NY
Anyone other tips
 

theturfboss

LawnSite Member
Location
Indiana
90k is almost profit. no debts at all

90K almost all profit? What about Fuel, Insurance, Maintenance cost? Is the labor free? Profit is what the business makes after paying these expenses. I am guessing that your definition of profit is different than mine, in this case, the formula I suggested would not work.
 
OP
J

JJLandscapes

LawnSite Senior Member
Location
Plainview NY
90k is almost profit. no debts at all

90K almost all profit? What about Fuel, Insurance, Maintenance cost? Is the labor free? Profit is what the business makes after paying these expenses. I am guessing that your definition of profit is different than mine, in this case, the formula I suggested would not work.
im pretty sure profit has one definition dunno why you would think otherwise from my post. that is for the two of us not each Our expenses are lower than most would believe. Beauty of a partnership is that both of us bust our ass and cut 100+ houses with only a 32" and a part timer 3 days a week in the hot months(so we dont collapse) using a 21"
 
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