You’ve worked hard to build your professional landscaping business over the years and seen plenty of changes along the way (Painted grass, anyone?); you’ve had your fair share of setbacks and probably some big wins, too. Without question, you know your business better than anyone else – perhaps better than you know anything else.
But, do you have a realistic idea of what it would sell for?
According to Viking Mergers & Acquisitions, which helps landscaping company owners sell their businesses, owners often believe their operations will sell for far more than they are actually worth. Viking recommends keeping the following formulas in mind so you’ll have at least a ballpark idea of what the selling price might be: 1) 45-50 percent of annual revenues plus the value of inventory; 2) five times “seller’s discretionary earnings,” or SDE, plus the value of fixtures, equipment and inventory; and 3) 2-6 times earnings before interest, taxes, depreciation and amortization (EBITDA).
In addition to their suggestion about chewing on the numbers produced by each formula above, the experts at Viking Mergers & Acquisitions recommend focusing on five key areas in order to ensure the highest valuation when it comes time to sell: branding, bidding software, equipment, organizational structure and licensing. Examining each of those areas is a healthy exercise for your business regardless of whether your considering a sale.
“By understanding the monetary and operational aspects of your business,” a Viking expert says, “you can begin to see where you are succeeding and where you may need some improvement to reach your ultimate goals.”