I would venture to say most companies that will watch this video are much smaller in size than the high numbers that are being mentioned. Are poorly managed companies bringing in between $500,000- $1,000,000 in the lawn/ landscape industry offering a variety mix of services even worth the hassle or liability of selling? My neighbor had a company that probably brought in 1-2 million a year and he just shut it down and retired. He didn't even attempt to sell it.
Most companies in the trades - and in your example lawn/landscape - are under 1M top line. In lawn/landscape most actually offer a mix of services - 75% of the time - too many services. Companies of this size, if purchased, are generally tuck-in acquisitions and get paid a low multiple of profits. Most aren't traditionally valued and there is some arbitrary number assigned to the value of their accounts (and maybe the assets). The VAST majority of these companies will never sell. Only recently has there become a market for companies of this size do to PE interests (tuck-in acquisitions).
@@5ForFifty Thank you for your reply. We have received letters from several different acquisition companies and we will probably call them and ask them what they are looking for and work towards it for the next couple years as you have said. Thanks again for your insight.
Start talking to them two or three years in advance. Ask them how companies like yours are valued, what metrics does the buyer look at, what are the attributes they care about when buying companies like yours in your geographic area. Based on what they tell you build a company that looks like what they want to buy. They all care about the speed of growth, how big the opportunity is in your market (how big your company can get), EBITDA (profits), and service mix - some buyers might only want fertilization and weed control companies, whereas others might want full-service maintenance, etc. Someday I will record this video. Based on my backlog it will be a while.
Very interesting!
I would venture to say most companies that will watch this video are much smaller in size than the high numbers that are being mentioned. Are poorly managed companies bringing in between $500,000- $1,000,000 in the lawn/ landscape industry offering a variety mix of services even worth the hassle or liability of selling? My neighbor had a company that probably brought in 1-2 million a year and he just shut it down and retired. He didn't even attempt to sell it.
Most companies in the trades - and in your example lawn/landscape - are under 1M top line.
In lawn/landscape most actually offer a mix of services - 75% of the time - too many services. Companies of this size, if purchased, are generally tuck-in acquisitions and get paid a low multiple of profits. Most aren't traditionally valued and there is some arbitrary number assigned to the value of their accounts (and maybe the assets). The VAST majority of these companies will never sell. Only recently has there become a market for companies of this size do to PE interests (tuck-in acquisitions).
@@5ForFifty Thank you for your reply. We have received letters from several different acquisition companies and we will probably call them and ask them what they are looking for and work towards it for the next couple years as you have said. Thanks again for your insight.
You're welcome. Great strategy. Good luck.
I would like to know a good plan on what to focus on if you know you want to sell in 5 years. When should you also start talking to an advisor?
Start talking to them two or three years in advance. Ask them how companies like yours are valued, what metrics does the buyer look at, what are the attributes they care about when buying companies like yours in your geographic area. Based on what they tell you build a company that looks like what they want to buy.
They all care about the speed of growth, how big the opportunity is in your market (how big your company can get), EBITDA (profits), and service mix - some buyers might only want fertilization and weed control companies, whereas others might want full-service maintenance, etc.
Someday I will record this video. Based on my backlog it will be a while.
@@5ForFifty Thanks for the reply.