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How to value and sell a small business?
Posted on 2/21/25 at 12:20 pm
Posted on 2/21/25 at 12:20 pm
My dad is nearing retirement and has asked for help with selling his lawn service.
This has been a successful business for many years. At times he has carried employees and ventured into the commercial side, however he's scaled back in the last few years and focused on residential with zero employees.
1. What's the proper way to put a number to the company?
Is it just the value of equipment and some sort of calculation of the current revenue? The company carries zero debt.
2. Where do I go to try to sell this thing?
TIA
This has been a successful business for many years. At times he has carried employees and ventured into the commercial side, however he's scaled back in the last few years and focused on residential with zero employees.
1. What's the proper way to put a number to the company?
Is it just the value of equipment and some sort of calculation of the current revenue? The company carries zero debt.
2. Where do I go to try to sell this thing?
TIA
3
Posted on 2/21/25 at 12:22 pm to GeauxTime9
How much profit does he make per year?
Can the business run without him?
Your best bet is to find a biz broker and have a convo.
Can the business run without him?
Your best bet is to find a biz broker and have a convo.
Posted on 2/21/25 at 12:44 pm to GeauxTime9
I’d guess he has 10-20 clients? Does he have a contract with each of them? Does the contract allow him to assign it to another lawn company? If so, I would guess he could sell those contract assignments for $5k or so.
The equipment he should know how much each is roughly worth and he can sell it on Craigslist if whoever he sells the contracts to don’t want to also purchase the equipment.
If he has no contracts, maybe someone would pay $1k or so just for the client list + his referral.
The equipment he should know how much each is roughly worth and he can sell it on Craigslist if whoever he sells the contracts to don’t want to also purchase the equipment.
If he has no contracts, maybe someone would pay $1k or so just for the client list + his referral.
This post was edited on 2/21/25 at 12:45 pm
Posted on 2/21/25 at 12:57 pm to GeauxTime9
quote:
however he's scaled back in the last few years and focused on residential with zero employees.
So his business is just himself? With long-time customers?
Not being a dick, but other than his (used) equipment, the name of his service probably isn't worth much without him attached to it, and that seems to be all that's there to value.
Posted on 2/21/25 at 3:43 pm to SlowFlowPro
Some multiplier of yearly EBITDA. Maybe 5-7ish, maybe less given that it’s a lawn business. No offense, but few barriers to entry.
This post was edited on 2/21/25 at 3:51 pm
Posted on 2/21/25 at 4:01 pm to Boomer Rick
quote:
Some multiplier of yearly EBITDA. Maybe 5-7ish, maybe less given that it’s a lawn business. No offense, but few barriers to entry.
No, not even close.
The business is both too small and on a downward trend per the OP. All it's worth is liquidation value of the equipment more than likely. If the OP is giving the wrong impression unintentionally and this business is doing a few hundred k$ per year, then it will be worth a bit more, maybe 2x seller discretionary income (SDE) but being on a downward trend still hurts valuation a lot.
OP, your best bet is an ad on BizBuySell.com (I have no affiliation with the site other than that my brokerage uses it occasionally to sell some of our smaller clients). You will want to put revenues and free cash flow (SDE) on the ad, but do NOT use the actual business name.
This post was edited on 2/21/25 at 4:02 pm
Posted on 2/21/25 at 4:03 pm to TigerHornII
Definitely could be true. Never sold a lawn business before.
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