Landscape Companies for Sale in South Florida
Commercial and residential landscape companies seem to be everywhere in South Florida. Competition is fierce but profits can be very high for many landscaping companies with a large enough route that is run properly. Many buyers of landscape companies are competitors wishing to expand their operations, local entrepreneurs just starting out in the industry, overseas buyers seeking an E2 Visa, or entrepreneurs from out of the area wanting to establish a successful business. Some landscaping companies for sale are owner-operated with minimal staff. Others are quite large with several crews servicing thousands of customers. Owners of landscaping companies wishing to sell their business should organize their historical records, obtain a business valuation from a business broker experienced in selling landscaping routes, and create a physical asset list of all equipment included in the sale.
Three Key Factors When Evaluating Landscape Company for Sale:
- Regular monthly service billing of the route
- Physical equipment included in the sale.
- Quality of the customers.
Regular Monthly Billing
To properly value a landscape company, one must determine the regular monthly service billing of the route. This means how much the company bills its customers (either residential or commercial) each month for basic service (with no ‘extras’). Some buyers simply stop right here with their evaluation process once they know the regular monthly billing. This is because they have their own equipment and staff in order to service the route, so they only want to buy the ‘customer list’ from the seller. The term ‘extras’ in the landscaping industry refers to extra work requested by the customer that is not a part of their regular monthly service (such as extra tree trimming, planting, or other projects). Since ‘extras’ are variable, most buyers usually stick with using the regular monthly service billing when determining the fair value of the business.
Determine Adjusted Owner Benefit
A professional business broker should determine the adjusted owner benefit of the landscape business as a part of the valuation process. Without including any extras, an experienced business broker may take the regular monthly billing and deduct the operational costs of the route such as its payroll, fuel, vehicle costs, and supplies. This should approximate the adjusted owner benefit, or the true economic profit derived by a working owner of the route. Most landscape companies are valued at about 2-3 x its annual adjusted owner benefit.
Equipment Value of Physical Assets
- Physical equipment typically includes trucks, trailers, and the equipment used to perform the landscaping work.
- One must carefully examine the age and condition of the equipment in order to best estimate the current depreciated value.
- Highly valued and up to date equipment will greatly enhance the valuation of a landscape company.
- Still, the quality and transferability of the route will most affect the valuation.
- For example, assume a landscaping route has 300 homes all within the same gated subdivision.
- Then assume another landscaping route has 300 homes spread out between Jupiter and Boca Raton.
- The first route does not need as many vehicles, trailers, and equipment as the second route.
- Further, the first route will have less labor and fuel expenses because the route is much tighter.
- The first route would be priced at a higher multiple of annualized earnings (plus physical equipment value) to reflect the more cost efficient route.
- In some cases, the seller of a landscape business has equipment or vehicles that the buyer does not need or desire.
- In such instances the owner is usually better off selling off unneeded physical assets before the sale.
Quality of Landscaping Company’s Customers
The quality of the customers greatly affects the multiple of earnings that most buyers are willing to pay for an existing route. Remember a landscaping route’s value primarily depends on the goodwill generated from its customer list. The primary components of a quality customer list are how long the customers have been with the route and the customer’s payment history. Low quality customers in a landscaping route do not have a track record of sticking with the company (at least not yet) or being reliable with their payment history (most long term customers have no problematic payment history!). Many buyers of landscaping routes will review the payment history of customers during the formal due diligence process, and will reduce their valuation of the route if there is a significant amount of problematic customers.
Determine the Best Asking Price
The best asking price of a landscaping route comes down to the amount and quality of the regular service route as well as the value of the included physical equipment. If the seller is willing to give a non-compete and facilitate a smooth transition after the sale, then that will increase the valuation. Always be sure to consult a professional business broker and receive the highest possible price for your landscaping route.
Give Martin at Five Star Business Brokers of Palm Beach County a call today with questions about valuing your landscaping company.