BizBen.com
500 New & Refreshed Posts, Postings Daily
Over 8,000 Postings & 2,500 Resources
Assisting Buyers & Sellers Over 25 Years!

Categories

How To Value And Sell Your Landscaping Business

Landscaping companies are one of the more desirable industries among today's business buyers. They sell well, especially when located in large markets.

There are quite a few differentiators that drive values in the landscaping sector. Its important for owners to understand these factors as they consider selling their company. It's worthwhile for owners to take any action possible to improve the value of their business, and the desirability in the eyes of buyers.

It's all about risk. When buyers see very little risk, they move forward. With that in mind, here are many factors that play a role in valuing landscaping companies.

Residential vs. commercial - Companies with mostly or all commercial clients will fetch a higher price. Buyers assign greater longterm value to commercial accounts which are often supported by contracts. Many entrepreneurs start on the residential side then migrate toward commercial, so commercial accounts sometimes reflect a more seasoned company. Commercial clients tend to be less price-conscious than residential customers. (On the flip side, many commercial customers enjoy pushing their payments to 60 or 90 days out, rather than cash payments typical for residential.)

Maintenance vs. construction - This is the huge dividing line in landscaping. Many landscape construction specialists, hardscape designers, pool builders and others have carved out incredibly successful, profitable businesses over the years. But buyers assign more risk to this project-based income than they do maintenance-based recurring revenues. That makes selling a maintenance landscaping business easier.

Market Locations - There is enormous competition among the largest landscaping companies in the U.S. who seek to purchase local and regional businesses to bring into their portfolios. They attack growth strategies on a market-by-market basis. So if your company is situated in a target market, they will assign greater desirability to your acquisition (and possibly pay more). These strategic buyers are not alone in seeking attractive markets. A company in the heart of Los Angeles County will get more attention, and more value, than the same company in Humboldt County.

Large vs. small - A small company carries greater risk so its valuation multiple will be lower than a larger company. This difference can be dramatic. Smaller companies may struggle to get 2.5 times earnings while a larger one may fetch above 4 or times earnings.

Reputation & Reviews - Yelp isn’t just for restaurants. Savvy business buyers often go right to social media outlets and review sites when they take their first glimpse of any opportunity. When investors see numerous negative reviews, it can kill their interest. They not only look at overall ratings scores and the ratio of positive to negative reviews, but also at how the company is responding online to the negative reviews. Are they addressing the negative comments properly and quickly? Are bad reviews allowed to build on themselves? Are bad reviews talking about the same issues?

Customer concentration - Years ago I sold a landscaping company which had 6 customers. That's not an easy sell. The company’s customer base was HOA management companies who oversaw multiple properties and associations. There is more risk involved when losing one customer can have a substantial impact.

Equipment & vehicles - Landscaping requires lots of trucks, equipment and tools. If these assets are repaired and replaced properly, it will increase the company’s value. If the business keeps regular repair logs, that also helps value.

Marketing methods - There are quite a few landscaping companies who do little or no marketing or advertising. They have a website that serves as a digital business card and they spend no time or energy on the web. These companies will fetch less in an acquisition than a company with a fully built-out marketing platform. I always cringe when an owner proudly proclaims that all his business is word-of-mouth. That’s a negative which can impact the ability to sell your company.

Owner Involvement - This is a big one. If the owner is the C-27 license holder and also making all the major business decisions, assigning crews, working at job sites, and driving all new business, that fact will be obvious to buyers. It will also have a substantial negative impact on the value of the business. Can you take a 3-week vacation and the business still works okay? Businesses that can answer yes will fetch a much greater number.

Most landscaping businesses will sell for a price somewhere between 2.5 to 4.0 times seller's discretionary earnings. That's a pretty huge range when you start doing the math. The more you can position the business favorably before you hit the market, the more likely you’ll have a successful outcome.

Categories: BizBen Blog Contributor, How To Sell A Business, Selling A Business

Contributor:

Brian Loring, CBB, ARM, CVB
Areas Served: Los Angeles, Ventura Counties
Phone:  661-360-1769 Cell, 661-360-1769 Text
ManageVisors specializes in the sale of contractor businesses and construction companies throughout California. Because we focus exclusively on contractor and construction based services, our seller clients benefit greatly from our transactional & valuation expertise. Brian Loring at 661-360-1769.




Place A Posting To Sell Or Buy A Business, Search All Postings


Sell A Business Fast: Place A For Sale Posting Now To Sell A Small Business - 7 Programs To Select From >
Find A Business To Buy Fast: Place A Wanted To Buy Posting Today - Best Way To Find & Buy A Business >
Search Business For Sale & Wanted To Buy Postings On BizBen - 500 New & Refreshed Postings Daily! >

Other Related Blog Posts, Articles, And Discussions You May Be Interested In

Co Brokerage When Selling A Business Before You Select A Business Broker: Do They Co-Broker With Other Brokers?

To receive the fullest exposure for selling their business, small business owner/sellers should make sure their listing broker or agent is co-operating with other business brokers and agents on their deal. Christina Lazuric a Orange County business broker discusses this topic with BizBen Users.
6 Untruths Told To Business Buyers 6 Possible Untruths Told To Business Buyers When Buying A Small Businesss

Even without meaning to be dishonest, sellers or brokers talking to someone who wants to buy a small business often make statements that are not true. And sometimes what is said is known to be a lie. The buyer is smart to carefully evaluate what they hear - six untrue statements sometimes told.
Curb Appeal Selling A Business Does Curb Appeal Really Help Sell Small Businesses? Brokers & Agents Discuss

This post is essential reading for any prospective business seller. Curb appeal is critically important, not just to the amount of the final sale price, but also to whether there will be a sale at all. Top ProIntermediaries and ProAdvisors discuss this valuable topic on this BizBen.com Discussion.
Dual Agency Brokers Does Dual Agency Really Work For All? ProIntermediaries Discuss This Topic

Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottomline is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.
8 Questions To Sellers 8 Questions You Most Likely Will Be Asked When Selling Your Small Business

When selling your small business, you'll be bombarded with questions - from the brilliant to the ridiculous. You need to be prepared. Here are some of the key questions you can expect to be asked. Tim Cunha (SF Bay Area Business Broker) reviews many of these possible questions from potential buyers.
Buying A Business Losing Money Should I Buy A Small Business That is Losing Money? Brokers & Agents Discuss

When considering buying a business that is losing money one has to be very careful. There are reasons that the business could be losing money that aren't fatal or extremely difficult to fix and there are other reasons that should send you running in the other direction. ProIntermediaries discuss.
How To Buy A Dry Cleaners Finding A Dry Cleaner Small Business For Sale That Will Be A High Performer

Before you buy a dry cleaners small business, read these critical tips about this industry. Discover why a dry cleaner needs to be "green" to be profitable. Peter Siegel, MBA (BizBen ProBuy, ProSell Program Advisor) explores this topic and other helpful strategies on buying a dry cleaning store.
Taking Back Up Offers Important Back-Up Offers: Crucial When Buying Or Selling A Small To Mid-Sized Business

An often overlooked aspect of selling (or buying) a small business is taking back-up offers during the entire process of selling (or buying) a business. Most sellers (or buyers) don't realize that over fifty percent of all deals/contracts fall out escrow or contract for one reason or another.
Buying An Absentee Small Business The Pros And Cons Of Buying An Absentee Run Small Business In California

Peter Siegel, MBA - BizBen Founder discusses the difference between a hands on owner and an absentee owner. It covers why someone would want to be an absentee owner and then goes on to discuss the pros and cons of buying an absentee run small business in the California marketplace.
Business Buyer Feedback On Postings 8 Items Buyers Of Small Businesses Find Critical When Reviewing Businesses

In this month's Business Buyer survey for BizBen.com, we asked participants in our ProBuy Program and 250 other random business buyers what they look for and avoid when looking at a business for sale postings online. Of the 20 potential posting characteristics we asked about, 8 stood out with most.