[tjl]

I have a lawn maintenance business for sale in Upstate NY and here is a breakdown:
ACTUAL 2005

COMMERCIAL LAWN MAINTENANCE ACCOUNTS
• (6) Commercial Customers
• 496,000(+) sf/ 11.6+acres all mowed turf
• Sales: $ 52,000.00
• Labor Cost: $ 20,652.00
• Material Cost: $ 1,350
• Gross Profit: $ 29,998.00

RESIDENTIAL LAWN MAINTENANCE ACCOUNTS
• (22) Residential Customers
• 265,800 sf/6.23acres of mowed turf and full lawn maintenance services
• Sales: $ 51,800.00
• Labor Cost: $ 19,725.00
• Material Cost: $ 3,050.00
• Gross Profit: $ 29,025.00

GRAND TOTAL LAWN MAINTENANCE PACKAGE
• Sales:$ 103,800.00
• Labor Cost: $ 40,404.00
• Material Cost: $ 4,400.00
• Gross Profit: $ 58,996.00

Anyone got any idea what I might be able to get for this. I'm thinking around the $100,000 figure. There is equipment available and that totals about $10,000. I would like to offer a package deal. Most if not all these contracts will be signed prior to selling.

Tom

[cutntrim]

I would guess about $25,000. $10,000 for your equipment and $15,000 (approx. one month's sales) for the contracts...assuming they're all signed. Several years ago my partner and I bought out another small contractor, and a few years after that I ended up buying my partner out.

In both cases, the customer list (termed "goodwill") was valued at one month's gross sales. Most contracts that I know of are cancellable with 30 days notice from either party, and the buyer is therefor only guaranteed one month under contract with the customers being bought. When I bought out my partner, none of my customers left because of it since it was still the same company (and me) providing the service. But when we had earlier purchased the other guy's company, almost all of his former customers bailed after the initial season. Not because of lack of quality (ours was superior), or increases/differences in contract (we kept them set up exactly the same as they had been before) but simply because they didn't like the change...or that it had been made FOR them and not BY them.

In any case, putting a price on the equipment is easy, but valuing the contracts isn't. Other guys may have different thoughts. Good luck with the sale.

[GLAN]

15 - 20% of what the accounts total worth is

Average is closer to 15%.


Unfortunately lawn businesses......heck. Any landscape business is not worth much selling. For the same reason "cutntrim" explains.

[Mac]

Id much prefer to value a business based on an earnings multiple. Its how big businesses do it and it makes complete sense to me. Personally, Id never sell for less than 4x's net, plus assets

[GLAN]

Originally posted by Mac
Id much prefer to value a business based on an earnings multiple. Its how big businesses do it and it makes complete sense to me. Personally, Id never sell for less than 4x's net, plus assets

Then you would never sell it........no one would buy it

[Nebraska]

Maintenance businesses around here are selling for 1 month revenue for the smaller ones ($15k -$200k).

A larger maintenance business with $300k + sells for 1x yearly revenue with 1 year contracts, 2x yearly revenue with 2 year contracts, and 3x yearly revenue with 3 year contracts plus assets.

How do I know? I bought a smaller company last year for 1 month of revenue and have met with two different prospects last fall who both offered me the 1x, 2x, 3x scenario plus assets. As you can guess everyone is being pushed for 3 year contracts.

The emphasis is "around here".

[Mac]

Originally posted by GLAN
Then you would never sell it........no one would buy it

Who wouldnt buy something with a payback period of 4 years and has an essentially never expiring revenue stream? How could you pass on a deal like that?

[GLAN]

OK

Lets refer back to "tjl" openning post.

He has a business with gross sales of $103k.........he wants to sell it for $100k.

Why would I buy a business regardless of the makeup of commercial and residential.......where it would cost me a full years income?

What about the customers the don't want to go with my company taking over? Or the ones that cancel a month, 2 or 3 after you took over?

Why would I want to purchase accounts and pay a full years service.........when I can probably pickup 10% of the accounts without even buying them.

Nebraska brings up that some accounts may have 2 or 3 year contracts with the company that is selling.............Doesn't mean by purchasing that business you still have those 2 or 3 year contracts....You have to enter into a new contract. Wouldn't you think they would opt for a 1 year contract to begin with, just to see that they are getting the same service they were satisfied with the previous owner.........

I wouldn't pay for accounts the amount based on presumed worth of 2 or 3 years.

In fact.......I wouldn't purchase an account for anything more than $250 of an account worth annualy $1,400 - $1,500