Landscaping businesses are hot in the small business acquisition market as everyone needs their lawns plush and their landscaping on point. Homeowners and property management companies take great pride in the appearance of the properties, and are always looking for the right person with the right price to make their properties look the best they can. And if you are considering the sale of your landscaping business, take the first step by asking the question, How much is my landscape business worth? A broker can help you find the answer to that question, but understanding the sale process is always beneficial to you as an owner. After all, your objective is to maximum the sale value, and in order to do that, you must first understand the many variables that come into consideration when looking at the possibility of selling your landscape business.
In order to show you the different variables, we have taken data from the last decade of all the landscaping businesses sold in the United States that met our criteria, and broken it down for your further review in order for you to make a the right decision on the sale of your business.
What is your landscaping business worth?
The value of your landscaping business is correlative to your individual business, the market and what potential buyers are willing to pay. Landscaping businesses that include services such as irrigation or hardscaping with a larger clientele will sell for more than a new landscaping business that only cuts lawns and prunes bushes. So while you are trying to figure out where your business fits in, here are some questions that should be answered before trying to find true value of your business.
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a landscaping business worth more?
When a buyer looks at purchasing your business, they are basically looking at their rate of return on their investment. So when will they recover what they have spent on the business? In order to show the prospective buyer that their ROI will be high and their relative risk will be low, you should have a few key characteristics associated with your landscape business.
And while it is true that the profit and sales are considered very important aspects when considering the purchase of a business, they are not the only factors that can add or decrease the value of your business. The following characteristics will give your business better value.
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Volume stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average landscape business sell for?
When looking at the graph, the data that we analyzed from the last decade consisted of businesses valued in the $50 thousand to the $10 million range. And these businesses have sold for as much as billions of dollars or as little as a few thousand. You can clearly see the average landscaping business sold in the last year in the United States was valued at 2.09 times earnings, with the average sale price coming in at $338,337. However, to have a clearer understanding you also have to look at the median sale of $160,000 and the most frequent sale of $120,000. All this information is a bit overwhelming without being broken down further, so later in this article we will break down these numbers and give you the information needed to confidently list your business for sale.
What is the most frequent deal size
The most frequently sized deal, when selling your landscape business, is the valuation range of $0-250k. This range has continuously had the most the number of sales, over the last 10 years. For example in 2018 and 2017 there was 206 landscape businesses sold, and of those 131 were valued at the 0-$250 range. There is no need to worry, if your business does not fall into this category though, there is always someone to buy your business and finding the right broker will help.
Is the landscape business market getting bigger?
Looking at the trend of the past 10 years, you could say that the market is getting bigger, in 2018 the total yearly transaction was well over $53 million and in 2017 it was over $31 million. There will always be the fluctuations in the market and trends but being able to keep your business stable during those times will give future buyers the assurance that your landscape business is a good investment and buy.
Are bigger businesses worth more?
Generally speaking, yes, the bigger your business is, the more that it is worth. Take a look at the image below, as there is an increase in revenue, your multiple becomes higher, which helps generate a better return on your personal investment.
To help you understand the graph a little better, look at the multiple from 2018 for the valuation price range of 0-$250k, here the average multiple lands right at 1.46x, with a total of 84 landscape business sold, however when your business’ valuation is in the $2-10 million range the multiple jumps to 4.24x, with 3 landscape businesses sold. So in the case of this data, there are significantly less sales for the bigger landscape businesses that have surpassed the 0-$250k value range.
What states have the most landscape business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? Florida had the most number of landscaping businesses sold with a whopping 485 sold. Florida being a sunny hot state for most of the year makes it an ideal place to have a landscape business, but just because you don’t live in Florida doesn’t mean that someone is not looking acquire a landscaping business in your area. Having a broker to help you find a buyer for your landscape business no matter what state you are in, can help you successfully sell your business.
Why would you sell in the first place?
When deciding to sell your business, it can become an overwhelming and difficult decision. Your reasons will always be different from the business owner next door. Maybe you want someone to cater to your needs instead of catering to theirs, or you are ready to retire. Whatever your reason is, be sure that you have the necessary knowledge and tools to get the value out of your business that you are looking for.
How long will it take to sell your landscape business?
There is not one set timeline for the sale of any business. The variables of the individual business and terms of the sale will define how long it will take to sell. Do keep in mind that generally speaking, the larger deals (over $1 million) take longer to sell, over the smaller deal (under $200k) because of the complexity of the business, in addition to the risk of purchasing a company that large for the buyer. And try to remember, that your individual business will always sell at a different pace than other landscape business, and being patient is an essential part in selling.
What is the process of selling your landscape business?
Our step by step process will help you become more confident, when you decide to sell your landscape business. Many business owners forget or overlook essential steps in the selling process and sometimes become confused and lost throughout the process. Doing each and everyone one of these steps will help you maximize the value of your business. If you have questions or concerns about your business’ value or the process itself please contact us and we will be happy to help.
Who will buy your business?
Finding a buyer can be frustrating and feel like a never ending search, but finding one is essential for the sale of your business. Tuck that frustration and fear aside because there are many options and possibilities. Buyers can range from first time buyers, experienced entrepreneurs, or private equity companies. No matter what the size or maturity of your business there is a buyer for your business, and we can help you find them.
How should I sell my landscaping business?
Marketplaces – (under $500k yearly profit)
Smaller business and micro-businesses are usually best sold privately by the owner through forums or classified websites.
To sell your landscaping business, check out:
Broker/M&A Advisor – ($500k – $10m yearly profit)
Medium sized businesses in the $100k-$20m are best sold through brokers who help with finding buyers, negotiating and structuring the deal. To sell your landscaping business, check out:
Investment Banks – (Over $10m yearly profit)
Larger businesses are best sold through investment banks or merger and acquisition companies. To sell your landscaping business, check out:
How much will it cost to sell my landscaping business?
Generally a business broker will charge 8-12% of the sales price of an landscaping business including inventory depending on the deal size. Larger deals attract a smaller fee. Below is a range of fees at each deal value level.
- Under $1m – 12%
- $1m -$4m – 10%
- $4m -$10m – 8%
- $10m -$25m – 6%
- $25m + – 4%
After reading this article and understanding the necessary steps and processes that come along with the sale of your landscape business, and you’ve decided that selling your business is the right decision, we encourage you to have your landscape business valuated by a professional broker, this will ensure that you are receiving maximum value for your business. We understand that your landscape business is your everything, and we always keep that in mind, when valuing your business. So when trying to answer that question of “what is your business worth”, comparing it to the business in the next town over will not get you the exact answers you seek. When you are ready to take the first step, we will be more than happy to help you find the true value of your landscape business, and can help accelerate the sale, by helping you find the right buyer. Feel free to fill out our valuation form and get started right away.