Landscaping Advice - I'm under contract
November 18, 2024
by a searcher from Harvard University - Harvard Business School in Alpharetta, GA, USA
I'm under contract on a residential design, install, maintain landscaping business. Is anyone familiar with the space who I could talk to for advice? Revenue is $3 million. Also, if anyone has thoughts on valuation multiples (please note EBITDA, SDE, CF, etc.), I would appreciate any thoughts on what is market today.
from Harvard University in Denver, CO, USA
- Residential maintenance is a nightmare unless you're at the very high end. I joke that most landscapers start in residential...the smart ones get out as fast as they can!
- Construction is fine in residential, but keep in mind it's coming off a high point fueled by stimulus checks and forced savings during Covid. Interest rates have negated some of that with new home purchases, but people stuck in their homes have also been upgrading. My guess is that the next few years won't look like the last few years.
- For multiples, on the commercial side for businesses with ~$1mm of EBITDA, we pay 5-6x for maintenance, 4-5x for snow, and 3-4x for construction (and blend them to match the revenue). For smaller companies, I'd take 1-2x off at each level and would expect your mix to be around 2.5-3x for a residential business, depending on construction percentage.
- Lots of deal structuring things but generally we pay ~70% up front, 15% in an earnout, and 15% in a cancellable seller note if the earnings don't remain at least as high as what we bought.
from Massachusetts Institute of Technology in Atlanta, GA, USA