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ppadavana
06-02-2010, 09:23 PM
I came across a couple lawn maintenance companies for sale and was wondering what is the best way to determine the value of the company. Both have equipment and accounts. Determining the value of the equipment is not the issue, its the value of the company.

I would assume you work off the gross potential of the current accounts in order to determine the value of the company. Would you also look at past years of production? Also, what calculating factor would you use to determine the companies value?

Example, lets say the total gross profits of the accounts/contracts is 50,000, what would the potential value of the company be?

Steve
06-03-2010, 01:00 AM
There is a lot of information about this topic on the forum here and in my lawnchat.com blog.

Buying a commercial lawn care client, how much are they worth? (http://lawnchat.com/?p=1555)

The pitfalls of buying an existing lawn care business. (http://lawnchat.com/?p=1394)

One of the easiest yet most often overlooked way to acquire lawn care customers (http://lawnchat.com/?p=51)

There are a few plus if you use the search feature there is a lot more reading.

To sum it up though, what we have found is the accounts are worth about one month's revenue.

Does this help?

ppadavana
06-03-2010, 05:21 AM
This does help. Plus, I did find other post on the forum that answered the my questions. Thank you.

Basically these two guys selling are nuts.

Steve
06-03-2010, 06:00 AM
Basically these two guys selling are nuts.

Can you give us your view now on why you feel that is the case?

ppadavana
06-03-2010, 11:15 PM
These two companies that I came across, one had a small enclosed trailer, one large Toro 44" walk behind and a 21" Toro commercial, blower and trimmer. He states that he has 35 accounts that pulling in $1000 per week and he wants $39,000 for the business.

The second company at least has a lot of equipment, most of it older, about 7 years old. One zero turn rider, three walk behinds, (One newer), all Bob Cats, open trailer, older pickup, trimmers, edgers, blowers, rakes, etc. This one has 22 accounts that produce about $30,000 per season. He wants $27,000 firm, for the business.

The first guy is totally nuts with his price and not even worth breaking out the calculator.

The second guy is a high with just some quick calculations. Yes there is equipment but most of it is older, maybe all total, worth $8000 to $10,000. 22 accounts that produce $30K per season, thats only about $4300 per month, and thats looking at this with our 7 month cutting season. Plus, we are two months into the cutting season so that 30K is down $8600. Plus, it could take another month to do the deal, down another $4300. So now what are the accounts really worth? I think one months worth is too high. Maybe only 1/2 months worth. Maybe $12,500 for the whole deal.

Steve
06-04-2010, 03:56 AM
That is very insightful and then can you imagine if you took $30,000 and used that as your marketing budget for this year?

I bet you would be so busy your head would be spinning!